Friday saw Canadian GDP print at -0.2% m/m compared with the previous number of 0.2% m/m. The manufacturing PMI also came in lower at 48 compared with the previous 49.6. At the same time, Canadian unemployment is drifting higher to 5.5%. In response, the Canadian 2-year note declined by 2.02% on Friday.
The spread between the US and Canadian 2-year note has widened in favour of the US, which has, in turn, pulled the USDCAD forex pair up. Since May, the correlation coefficient between the 2-year spread and the USDCAD has increased and is currently at 64%.
Friday, saw the USDCAD push into the pair's bullish channel between the blue and red bands. The daily RSI is also above 50 (blue rectangle), which is the bullish side of the indicator. The longer it maintains on this side, the greater the probability for higher USDCAD prices ahead.
Senior Market Specialist
Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.