The dollar eased against the loonie, dropping sharply and falling near 1% for the week. The decline in the greenback put the U.S. currency lower against the Canadian dollar for the year U.S. yields were mostly lower, weighing on the greenback. It appears that the Reserve Bank of Canada might be slightly more hawkish than the Federal Reserve which has put upward pressure on the Canadian currency.
The USD/CAD moved lower on Friday, the last trading day of 2021. Resistance is seen near former support, an upward sloping trend line that coincides with the 10-day moving average at 1.2815. Support is seen near the 50-day moving average at 1.2650. Short-term momentum has turned negative as the fast stochastic generated a crossover sell signal. The exchange rate is oversold as the fast stochastic prints a reading of 9, below the oversold trigger level of 20. Medium-term momentum has turned negative as the MACD (moving average convergence divergence) index generated a crossover sell signal. This scenario occurs as the MACD line (the 12-day moving average minus the 26-day moving average) crosses above the MACD signal line (the 9-day moving average of the MACD line). The MACD histogram is printing in negative territory with a downward sloping trajectory which points to a lower exchange rate.
Chicago PMI Beats on the Topline
The Chicago Purchasing Managers Index rose to 63.1 in December. This uptick in the total index reverses last month’s decline. Inventories hit a four-year high as firms created buffers for longer lead times. Among the main five indicators, Production and New Orders and were higher. Order Backlogs, Employment and Supplier Deliveries fell across the month.
This article was originally posted on FX Empire