We are pleased to bring you the latest edition of the series produced by our colleagues in RBC Capital Markets, hosted by George Davis, CMT, the award winning Chief Technical Analyst for Fixed Income and Currency Strategy.
In this installment, George talks about the two main drivers of inflation. The first driver is due to lingering supply chain issues. The second driver has to do with the Russia/Ukraine conflict contributing to higher commodity prices, especially in the energy and agriculture sectors.
As a result of high levels of inflation, we have seen more aggressive policy from the Bank of Canada “BoC”. CAD appreciation has been limited due to rate differentials between the U.S. and Canada, as rates in the U.S. have risen at a faster pace. The expected trading range for next month is 1.2700 to 1.3200. For USD buyers, 1.2700/1.2800 area would be opportunities to add exposure. For USD sellers, 1.3100/1.3200 area would be opportunities to reduce exposure.