CAD Rallied Supported by Positive Domestic Data

The Canadian dollar was set on the upward trajectory last week. A barrage of economic domestic data pushed the currency up. A fast-paced vaccination process in the country also added some strength to the CAD. This week is less eventful: no important economic data is forthcoming. Nor are there bank speakers scheduled for this week. Therefore, there is no economic information to give the Canadian dollar direction. Analysts expect the USD/CAD pair to head for the 1.20 psychological level.  

Last week’s data was indeed upbeat. Inflation rose to 3.4% in April. Considering that the country is still partially in quarantine and that many activities are still forbidden in Canada, the figure is reassuringly high. Retail sales in March proved to be much higher than expected, being at 3.6% MoM. Although job numbers for April were disheartening, the rest of the economic data softened the bad impression they conveyed. All in all, the Bank of Canada is determined to keep a hawkish stance on the economy.   

Due to a lack of domestic events this week, the Canadian dollar will be influenced by external factors. If commodity prices fluctuate, they might negatively affect the CAD. Analysts maintain that the USD/CAD is close to approaching the crucial 1.2000 support level, which will heavily be tested in an environment more open to risk-taking.