The Dollar May Be At An Inflection Point

Canadian Dollar:  The US snapped a three-week advance against the Canadian dollar that lifted it from a three-year low (~CAD1.2365) to around CAD1.2650 at the end of March.  That late March high was retested last week.  A robust Canadian jobs report blew away expectations and gave the Loonie a bid (FXC). The greenback settled on its lows, and a  break of CAD1.25 will open up the downside.  The MACD is trying to turn lower, while the Slow Stochastic already has rolled over. The Bank of Canada meets on April 21. Even though Ontario has reintroduced social restrictions, and the excess fatalities in Canada may rival the US on a per capita basis, the central bank will likely be increasingly confident of a strong economic rebound.

Australian Dollar:   The Aussie peaked in late February at a little over $0.8000.  It fell to around $0.7600 and has spent most of the past three weeks confined to around a half of a cent range around it.  While there appears to be little momentum, the MACD is trying to turn up from overextended territory, and the Slow Stochastic is already trending higher.  Upticks last week were capped by the 20-day moving average, which begins the new week near $0.7660 (FXA).  Australia lost around 350k full-time positions from March through June last year.  In the eight months since, it has recouped them all, plus. On the other hand, the unemployment rate was at 5.8% in February, up from 5.1% at the end of 2019.  The March figures are the highlight of next week's data.  

Mexican Peso:  The dollar eased by around 0.7% against the peso last week.  It was the second consecutive weekly decline and the fourth in the past five weeks.  This largely mirrors the performance of the JP Morgan Emerging Market Currency Index.  Mexico reported a jump in inflation (CPI 4.67%,  up from 3.76% in February, and the bi-weekly readings warn it may not have peaked.  Mexico also reported a 0.4% rise in industrial output (economists had projected a decline).  A recovery in auto production and sales seems to be critical and linked to the strengthening US economy.  The greenback peaked in early March near MXN21.6350 and last week recorded a low around MXN20.0650, its lowest level in almost two months.  The move is stretched.  The MACD is at its lows for the year, while the Slow Stochastic is poised to turn higher from oversold terrain.  The MXN20.40-MXN20.50 area offers the first hurdle for a dollar bounce.  

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Read more by Marc on his site Marc to Market.

Disclaimer: Opinions expressed are solely of the author’s, based on current ...

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