The Canadian dollar has been on a relentless uptrend since the Bank of Canada started to talk rate hikes. The rally gained momentum after the BoC raised interest rates last week and suggested it is the beginning of a new monetary policy cycle. Rising oil prices and stronger data validated the central bank’s optimism sending USD/CAD below 1.26. Retail sales also rose doubled expectations in May although consumer prices grew at a slightly slower pace. Friday’s Canadian economic reports left a lot to be desired with CPI and retail sales ex autos falling -0.1%. Technically, the pair seems bound for more losses and while 1.25 is an important psychological level, the main technical level to watch for USD/CAD is the 2016 low of 1.2461.
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