Bank of Canada's spring 2021 business outlook survey revealed that local businesses continue to weigh in on speedy recovery, even though weakness remains. Meanwhile, BOC's business outlook index was the third-best ever recorded, which underpins improving optimism.
"Results from the spring Business Outlook Survey suggest that business sentiment continues to improve. Firms reported less uncertainty related to the COVID 19 pandemic and strengthening demand from weak levels. Still, the recovery remains uneven, with firms tied to high-contact services facing ongoing challenges."
Despite the positive findings of the report, however, there is still room for improvement.
Bank of Canada still sees significant excess capacity at hard-hit firms.— BNN Bloomberg (@BNNBloomberg) April 12, 2021
The USDCAD pair had a positive reaction to the news. As can be seen on the hourly chart below, the pair jumped immediately following the publication of the report. The hit on the Loonie is underpinned by the spare capacity that is still faced by Canadian businesses.
Meanwhile, the greenback continues to strengthen ahead of the pivotal inflation data in the U.S., which is scheduled for release tomorrow. The rising Consumer Price Index (CPI) in the States is likely to further bolster the greenback as the demand for the currency increases.
This could cause the USDCAD to shoot up towards the upper limit of the currently unfolding ascending channel. The significance of the latter has already been proven on two separate occasions.
Notice that before the price action can head towards 1.26200, it would have to break out above the 50-day MA (in green) and the 100-day MA (in blue) decidedly. The two moving averages serve the roles of floating resistances.
The MACD indicator underpins strengthening bullish momentum in the short term.