USD/CAD is trading down 0.41% at 1.2980

The Canadian dollar will gain less ground than previously thought over the coming year as the growing risk of a global economic slowdown bolsters demand for safe-haven currencies such as the U.S. dollar, a Reuters poll showed.

The median forecast in the poll was for Canada’s currency to strengthen 1.6% to 1.28 per U.S. dollar, or 78.13 U.S. cents, in three months’ time, compared to 1.26 in last month’s forecast.

It was then expected to climb to 1.25 in a year’s time, compared with the previous forecast of 1.23.

Economists have slashed their forecasts for global economic growth in recent weeks as the war in Ukraine and COVID-19 lockdowns in China exacerbate supply shortfalls, making it more likely that central banks will hike interest rates aggressively to tackle soaring inflation.

Oil, one of Canada’s major exports, has plunged about $25 in recent weeks, dropping back below $100 a barrel, and Canada’s commodity-linked stock market has fallen 15% below its March record high.

The Bank of Canada is set to raise its overnight rate by a hefty 75 basis points (bps) next week and by another 50 in September, front-loading a campaign to take monetary policy to where it will restrain the economy, a separate Reuters poll showed on Wednesday.

As central banks tighten, yield curves have been flattening. A closely watched part of the U.S. Treasury curve, between 2- and 10-year yields, has inverted. That’s a phenomenon that has in the past preceded U.S. recessions.

On technical fronts USD/CAD RSI stood at 58.35 and currently it is trading above all MA. So, BUY position can be taken with following target and stoploss:

TRADE SIGNAL – : USD/CAD – BUY: 1.2978, TARGET: 1.3075, STOP LOSS : 1.2910