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USDCAD Tests Resistance After ECI Strength and GDP Miss

CANADA
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  • Strong US employment costs and lacklustre Canadian monthly GDP growth (0.2% M/M vs cons 0.3, Mar advance indicated flat) have seen USDCAD touch a high of 1.3729 after lifting ~50 pips on the data albeit after slipping into the release.
  • It stopped just short of resistance at 1.3731 (Apr 25 high), with next resistance seen around the 1.38 handle with 1.3804 (Apr 19 high).
  • Can-US yield differentials have slipped 2-3bps across 2 to 10-year tenors.
  • There’s not much change in BoC-dated OIS for near-term meetings, with April labour and CPI reports still to come before the next decision in June. Markets look for ~13bp of cumulative cuts for June with a cut fully priced for July.
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  • Strong US employment costs and lacklustre Canadian monthly GDP growth (0.2% M/M vs cons 0.3, Mar advance indicated flat) have seen USDCAD touch a high of 1.3729 after lifting ~50 pips on the data albeit after slipping into the release.
  • It stopped just short of resistance at 1.3731 (Apr 25 high), with next resistance seen around the 1.38 handle with 1.3804 (Apr 19 high).
  • Can-US yield differentials have slipped 2-3bps across 2 to 10-year tenors.
  • There’s not much change in BoC-dated OIS for near-term meetings, with April labour and CPI reports still to come before the next decision in June. Markets look for ~13bp of cumulative cuts for June with a cut fully priced for July.