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RBC Capital Markets Says USD/CAD Bias Remains Skewed Toward Top End Of 1.3500-1.3900 Range
RBC Capital Markets said it expects USD/CAD to continue to trade within its expected range of 1.3500 to 1.3900 in the coming months, with the bias currently skewed toward the top of that range.In its CAD Weekly Soundbites report, RBC said there "isn't a clear reason to sell the USD," noting that the US dollar remains "a relatively high yielder in G10," while there are "consistent flows into US assets" and the greenback continues acting as a safe haven."That leaves the path of least resistance for the USD toward a drift higher in the near-term, putting upward pressure on USD/CAD," RBC said.The bank added that both the Federal Reserve and the Bank of Canada are on hold in the coming months, meaning "the relatively wide US-CA rate differentials are acting as a floor under USD/CAD."RBC also noted that Canadian investors remained net buyers of foreign securities, including US assets, in March, "albeit at a much slower pace than in the past several months."On technicals, George Davis of RBC said the break above "strong congestive resistance at 1.3728 argues for a greater correction toward secondary resistance levels at 1.3799 and 1.3869.""We continue to favour fading such rallies based on the broader downtrend that is in place," Davis said.He added that while initial support is located at 1.3728 and 1.3643, "prices will have to pierce a trendline at 1.3560 to reassert the downtrend.""Reassess on a daily close above 1.3932," Davis added.
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International
RBC Capital Markets Expects April CPI To Accelerate; Says H2 BoC Hike Odds Exceed Chance Of Cut
RBC Capital Markets said Tuesday's April CPI report will be the highlight for next week, with the headline print likely to accelerate while broader price pressures should remain contained.In its CAD Weekly Soundbites report, RBC said it and consensus expect April CPI to rise 3.1% year-over-year, compared with 2.4% previously, as headline price pressures should escalate from higher energy costs.The bank added that retail sales data due Friday should show "firm gains" consistent with Statistics Canada's flash estimate of 0.6%, while excluding autos, retail sales could rise almost 1%."The consumer was resilient in 2025 (consumption growth +2.3%), particularly in the face of trade uncertainty and the massive population growth shock, and that momentum is carrying into Q1," RBC said.RBC said it sees the Bank of Canada on hold in 2026, with hikes in 2027, but added that "the chance of H2 hikes far exceeds the chance of a cut.""Market pricing for 2026 rate hikes edged higher (50bp priced in) this week and 10y bond yields jumped to the highest since 2024 on higher oil and global bond market dynamics," the bank noted.RBC added there are "inflation and growth cross-currents to manage" but said that "if push comes to shove the BoC will prioritize inflation, even if it means hiking into a squishy growth backdrop."The bank also said USD/CAD remains trapped in its expected 1.3500-1.3900 trading range for the coming months, with the bias "currently skewed towards the top of that range."On the global front, RBC highlighted next week's flash first-quarter GDP data in Japan, employment data in the UK and Australia, CPI reports in the UK and Japan, flash PMIs in the UK, Euro area and US, and UK retail sales. The Federal Reserve will also publish minutes from its April meeting, while Nvidia is scheduled to report earnings Wednesday.On technicals, George Davis of RBC said the break above "very strong support (3.62%) has prevented a potential triple top from forming and shifts the focus up to 3.71% and 3.78%.""The 2024 high (3.88%) serves as additional support. A return below 3.47% is required to nullify the topside risks," Davis added.
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International
Cargo Traffic to Los Angeles Port Expected to Rise in Week Ending May 30
Cargo traffic at the Port of Los Angeles is expected to rise in the week ending May 30, according to data from the ship-tracking system Port Optimizer.A total of 110,788 20-foot equivalent units, a standardized measure of cargo capacity, are projected to reach the port in the week, the data showed. That volume reflects a roughly 15% increase from the previous week and a 60% rise from a year earlier.Twenty freight vessels are scheduled to arrive at the port in the week ending May 30, the data showed. That is the same number of vessels during this week and more than the 18 scheduled for the week ending May 23.The Trump administration has postponed its plan to suspend tariffs on beef imports, which would have allowed more imported beef into the US, multiple media outlets reported Tuesday.