By Ketki Saxena
Investing.com -- The Canadian dollar traded little changed against the greenback today, but remained close to its lower level in two and a half months.
The Canadian dollar gained support from risk-on sentiment in equities on earnings optimism, despite surging US treasury yields that hit a 15 year high as fears of a higher for longer interest rate narrative grow, and investors await further commentary from US Federal Reserve chair Jerome Powell at the Jackson Hole symposium later this week.
The higher for longer narrative is also lending support to the loonie, as bets now rise that the Bank of Canada too will hike rates at least one more time before it pauses monetary policy tightening this cycle - supported by last week's hotter than expected domestic Consumer Price Index data, and increases in both the Raw Materials and Industrial Product Price Index readings.
On a fundamental level for the pair, Ed Moya Senior Market Analyst for the Americas at OANDA notes, "The USD/CAD bullish uptrend appears to be facing some resistance as FX traders anticipate both the Fed and BOC are possibly one more rate hike away from being done with tightening."
"If markets get a very hawkish Fed Chair Powell this week could see the return of the king dollar trade."
On a technical level for the pair, analysts at Forex Live note, "The USDCAD has moved below its 100-hour moving average for the 1st time since August 11 in trading today. That 100-hour moving average comes in at 1.35227."
" Stay below keeps the sellers more in control with the 38.2% retracement of the last move higher from the August 10 low at 1.34965 as the next target to get to and through.
"A move back above the 100-hour moving average and high of swing area 1.3527, puts the buyers back in control."
Up next, Canada's retail sales data, due Wednesday, is likely to provide further impetus for the pair, and serve as a key data point to guide insights into the Bank of Canada's next move.