The Canadian Dollar has been one of the major overperforming currencies in 2021, but has been fading lately, with declines recorded against the Dollar, Pound, Yen and Euro over the past month. The National Bank of Canada said the Canadian Dollar’s recent decline in value only made it more undervalued compared to fundamentals, as they forecast a rise in 2022.
Canada’s economic growth is getting better, employment is strong and public finances are improving rapidly. Quantitative easing is over and inflation is high enough to warrant some rate hikes in 2022. Canadian exports rose 6.4% to hit a record CAD 56.2 billion in October. Exports grew in 8 out of 11 product sections. The combined gains in exports of motor vehicles and spare parts and energy products accounted for nearly 80% of total growth. Imports rose 5.3% to a record CAD 54.1 billion. Profits were observed in 7 of the 11 product sections. Motor vehicles and their parts accounted for nearly 2/3 of the monthly increase. The trade surplus widened from CAD 1.4 billion to CAD 2.1 billion, well above expectations of CAD 1.6B. It was also the biggest surplus so far in 2021.
The CAD traded higher against the US Dollar yesterday in line with the rebound in oil prices. The USDCAD pair posted a daily decline of -0.94% to close at 1.2636. Against the Euro, the CAD also strengthened by 1.04%. Against the Pound, the CAD registered a gain of +1.04%, while against the Yen, the CAD garnered a gain of 1.03%.
CADCHF,D1
CADCHF, D1 – This currency pair has been stable for the last 7 years. It has been trading in a range between its Sept’2017 high (0.7958) and March 2021 low (0.6603). In the midst of uncertainty during the pandemic, ranging from the Alpha, Delta to Omicron virus variants, CHF has benefited as a safe haven. However, Canada’s massive economic recovery throughout 2021 has made the pair strengthen back to the 0.7300 price range this December. Intraday bias is neutral while gains are seen confined to midlines on BB. A move to the upside would target the 0.7408 minor resistance while the downside would test the minor support around 0.7250 before running towards the 0.7138 low. Broadly speaking the pair will tend to consolidate in a limited space.
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Ady Phangestu
Market Analyst – Educational Center – Indonesia
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