USD/CAD Analysis
- Hawkish Fed re-pricing weighs on CAD.
- Demand destruction leaves crude oil muted.
USD/CAD Fundamental Backdrop
USD/CAD had a rollercoaster week after the Bank of Canada (BoC) shocked markets by mountain climbing charges by 100bps. The knock-on influence noticed cash markets value the Fedβs upcoming fee choice larger with 100bps name gaining traction. Higher than anticipated inflation, PPI and retail gross sales knowledge augmented this outlook as we sit up for Canadian inflation subsequent week (see financial calendar under):
USD/CAD ECONOMIC CALENDAR
Source: DailyFX Economic Calendar
Depressed cimpolite oil costs stay with the Chinese financial system exhibiting indicators of slowing regardless of elementary provide knowledge below pressure.
TECHNICAL ANALYSIS
USD/CAD DAILY CHART
Chart ready by Warren Venketas, IG
Price motion on the every day USD/CAD chart is buying and selling at a key inflection level (long-term channel resistance) making larger highs. On the opposite, the Relative Strength Index (RSI) displays slowing upside momentum (crimson) thus suggestive of bearish divergence. Traditionally, bearish divergence factors to impending draw back however below the present elementary backdrop it’s tough to see this occurring short-term. A affirmation shut/breakout above the ascending channel will invalidate this bearish indication significantly with markets expectant of a 100bps Fed fee hike.
Key resistance ranges:
Key assist ranges:
- 1.0327 (382.% Fibonacci)
- 20-day EMA (purple)
IG CLIENT SENTIMENT DATA: MIXED
IGCS reveals retail merchants are at the moment prominently LONG on USD/CAD, with 62% of merchants at the moment holding lengthy positions (as of this writing). At DailyFX we sometimes take a contrarian view to crowd sentiment however after latest modifications in longs and shorts, sentiment reveals a watchful bias.
Contact and observe Warren on Twitter: @WVenketas
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