Canada Markets

The spot Canadian dollar realized its largest one-day move higher on March 6, supported by a move higher in crude oil futures and the decision by the Bank of Canada to leave rates unchanged this month, signaling "we need to give higher interest rates more time to do their work," as stated by Bank of Canada Governor Tiff Macklem.

The spot dollar gained 42 basis points to close at $0.739814 CAD/USD, its largest one-day move since Dec. 13 or almost three months. This move follows a recent dip to $0.735045 CAD/USD on Feb. 28, its weakest trade in 11 weeks or since Dec. 12.

Support was seen at the 61.8% retracement of the move from the Oct. 31 low to the Dec. 28 high, calculated at $0.734674 CAD/USD, with psychological support uncovered at $0.7350 CAD/USD.

Over the past four weeks, the spot loonie has moved within a 100-basis point or one-cent range, from a low of $0.735045 CAD/USD and a high of $0.744263 CAD/USD. So far this week, trade in the spot dollar has ranged within the previous week's move in a sideways move, up 23 basis points over three sessions while ending in the upper half of the range traded over four weeks.

Upside resistance remains at the four-week high of $0.744263 CAD/USD, while a breach of this could signal a potential move into an uptrend. The 38.2% retracement of the move from the December high to February low is calculated at $0.743963 CAD/USD, while the 50-day moving average is seen at $0.743255 CAD/USD, both potential levels of upside resistance.

The lower study shows investors holding the two-smallest net-short futures position seen since August 2023 in recent weeks, close to a neutral position as traders show caution.

Cliff Jamieson can be reached at cliff.jamieson@dtn.com.

Follow him on X, formerly known as Twitter, @CliffJamieson.

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