USD Regains Ground – CAD The Weakest Link

The US dollar began the new trading week on the back foot, suffering some profit taking. However, it is now re-asserting itself and gaining some ground. Various FOMC members took turns in speaking out and left a mixed message. Nevertheless, their words keep the Fed on track for a hot summer hike and this keeps the greenback bid.

Looking across the board, the Canadian dollar is the weakest link. The loonie also suffers from a slide in oil prices, which join still-reduced production in Canada, due to the Alberta wildfires. The fall to $47.47 in WTI Crude isn’t helpful.

What’s new from the Fed?

John Williams from the San Fancisco Fed talked about 2-3 rate hikes this year and also 3-4 in 2017. This is a repeat of what he had already said last week. However, it is in contradiction with what he said over the weekend, that June is a “fine balancing act”.

Eric Rosengren of the Boston Fed sounds “trigger happy” with readiness to pull the trigger in June. He used to be a dove in the not so distant past.

James Bullard of the St. Louis Fed has been optimistic, saying that negative influences from abroad have weakened. However, he refrained from uttering the word “June”.

All in all, it is hard to find news in these words and it is easier to tie the stronger greenback to an extension of the minutes-driven greenback rally.

USD/CAD is challenging resistance at 1.3170 and has temporarily topped the line. The next line is 1.3240 and the strongest level is 1.3310. Support awaits at 1.3080 followed by the very round 1.3080.

More: Levels to watch on USD/CAD.

Here is the Dollar/CAD chart: