Should we keep a close eye on the upside potential of the Canadian dollar, which has become the strongest currency in the wake of the U.S. dollar’s rise?

Should we keep a close eye on the upside potential of the Canadian dollar, which has become the strongest currency in the wake of the U.S. dollar’s rise?

11.12.2023

Last weekend, despite the release of Canada’s third-quarter capacity utilization rate on the 8th showing a decline from the previous reading of 81.4% to 79.7%, the Canadian dollar emerged as the strongest currency during U.S. trading hours. The CAD/JPY pair rose from 104.883 to 106.861. After expanding to the -3σ level on the 4-hour Bollinger Bands, the pair retreated back toward the 20-period moving average (MA) centerline.As the pair has maintained its upward momentum in early Asian trading today, we will be watching the price action of the CAD/JPY pair as we move into European trading hours.

European currencies saw the euro rise slightly against the yen after the final reading of Germany’s November Consumer Price Index (CPI), released on the 8th, matched the previous month’s year-over-year rate of 3.2%.The euro/yen pair rose from 153.871 to 156.070. The downtrend on the hourly chart has paused, and the pair has broken above the 20-period moving average (MA). We will be closely monitoring price movements leading up to the ECB meeting this Thursday to see if the euro continues to rise against the yen.

Today, during Asian trading hours, Malaysia’s industrial production will be released at 13:00, followed by Sweden’s expected price trends at 14:30; during European trading hours, Norway’s consumer price index and Turkey’s current account balance will be released at 16:00,Turkey’s Industrial Production and Unemployment Rate at 17:00, the Czech Republic’s Consumer Price Index at 17:00, the U.S. Employment Trends Index at 24:00 (U.S. time), the U.S. 6-month Treasury bill auction at 25:30, the U.S. 10-year Treasury bond auction at 27:00, and remarks by the RBA Governor at 7:20 the following day.I want to carefully assess the upside potential of the Canadian dollar, which has become the strongest currency by riding the coattails of the US dollar.