USDCAD news - page 49
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USD/CAD Trades Near Critical Trendline Support Ahead Of Friday’s Labor Data
USD/CAD declined further on Thursday but bounced higher toward the European close to somewhat limit losses on the day. The pair shows strong downside momentum, posting losses in six out of the past seven sessions while the single day gain on Monday was essentially a flat session.
The Loonie had posted the largest gain among the majors on Wednesday but fell towards the bottom of the list on Thursday as the currency posted the smallest gain against the Greenback among its major counterparts. The US Dollar shows the largest losses among the majors to lead the decliner’s list for a second consecutive session.
Following a bearish engulfing print in the US Dollar index (DXY) on Wednesday, the index declined further today to wipe out early week gains and to trade at fresh two-week lows. DXY has declined from resistance at 103.54 this week, a level that has kept the index lower since the middle of December. The level marks a prior spike low from July 2002 and the failure at the horizontal level this week marks the third attempt to scale the level.
Oil prices recovered for a second consecutive day following a sharp fall on Tuesday. The weekly oil inventories data triggered a turn lower in the North American session but losses were not sustained as WTI crude oil prices (USOIL) have returned to positive territory shortly ahead of the North American close. Tuesday’s bearish engulfing will tend to keep some selling pressure in the commodity but the gain today has served to erase early week losses, leaving the instrument relatively unchanged on the week thus far.
The latest oil inventories report released by the Energy Information Adminsistration (EIA) indicated a draw of 7.1 million barrels for the week ending December 30th against the analyst consensus for a draw of 2.0 million barrels. There was some expectation for a larger draw following the API report released earlier this week that indicated a draw of 7.4 million barrels. USOIL briefly dropped to negative territory on the day following the report but trades close to pre-release levels shortly ahead of the North American close. The rally today has been capped at $54.03 marking the 61.8% Fibonacci retracement as measured from Tuesday’s high. To the downside, support is seen at $53.07 as the level has held the pair higher over the past two sessions.
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Canadian November trade balance CAD +.0.53 bln vs -1.6bln exp
Canadian November trade balance report 6 Jan
USD/CAD forecast for the week of January 9, 2017
The US dollar fell against the Canadian dollar most of the week, slamming into the uptrend line that has been so supportive in the past. This makes a lot of sense that we would stop pair though, because we have seen a significant amount of buying pressure in this market every time we test this vital trend line. I think that the market is ready to bounce, but we will more than likely have to look to short-term charts to get the actual signal.
Ultimately, I think that the market is trying to build up enough momentum to finally clear the 1.35 handle, freeing the way to the 1.40 level above. Keep in mind that the Canadian dollar is highly influenced by crude oil markets, which are a bit volatile at the same time, and what can be seen as a bit of a circle.
I recognize that the oil markets are overbought, and I believe that oversupply becomes a major issue given enough time. The high oil prices continue to drive money into the shale oil fields, as US and Canadian drillers take advantage of higher profit margins. Also, even though the OPEC and even some non-OPEC countries agreed to oil output production cuts, the Iranians are exempt from this, and of course the aforementioned American and Canadian companies have no interest in participating. Ultimately, the oversupply issue will return to the forefront of the minds of traders, and will weigh upon the crude oil market, thereby making the Canadian dollar less attractive. Simultaneously, we have a serious strength in the US dollar overall, and I don’t see why that’s going to be any different here.
Having said that, there is always the other side of the equation and other possibility. I believe that the 1.30 level been broken to the downside underneath would be a sign that the USD/CAD pair would continue to go lower, perhaps reaching towards the 1.25 handle underneath. At this moment, though, I believe that the uptrend is still very much intact, so until I have to approach the market. On signs of support or bounce on the daily chart, I am long.
BOC Q4 2016 business outlook survey: Hiring intentions at best level since 2014
Canada November building permits -0.1% vs -6.0% expected
Building permits data for November from Statistics Canada
Shortly before this report, the December housing starts numbers were stronger than expected so a good reading here doesn't come as a shock.
USD/CAD fell on the housing starts data but these are minor releases and the pair is struggling to stay down.
Month-over-month changes in value.
USD/CAD Fails To Sustain Break Of Critical Trendline Support
A press conference held by Donald Trump on Wednesday triggered volatility in the currency markets with a sharp fall in the Greenback. USD/CAD dropped to fresh lows for the week and briefly broke below a critical rising trendline that dates back to the early May. Losses were not sustained and a recovery shows the pair regaining the trendline.
The rising trendline in USD/CAD connects the 2016 low posted in May with the low printed in August. The trendline held the pair higher in December, ahead of the Federal Reserve monetary policy meeting. While the pair scaled below the trendline on an intraday basis, a recovery is accompanied by a 4-hour bullish hammer print that closed above the rising trendline. The daily close will be important in further assessing if the trendline holds.
Donald Trump held his first press conference since the elections today. There was some expectation for forward guidance in regards to heavily anticipated tax reforms and a stimulatory fiscal policy. The US Dollar rose ahead of the press conference in anticipation, but markets were dissappointed as the speech took another direction. The President-elect focused on his exit from the Trump organization, outlining his intentions to pass leadership to his sons in order to prevent a conflict of interest. Media questions were concentrated on recent unsubstantiated reports that Russia had incriminating evidence against Trump, concerns were promptly dismissed by the President-elect.
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USD/CAD forecast for the week of January 16, 2017
The USD/CAD pair fell during the week, but found enough support at the 1.30 level to turn around and form a hammer. If we can break above the top of the hammer, I believe the market will continue to try and break above the 1.35 level above. Ultimately, if we break down below the 1.30 level, the market should then break down below and grind towards the 1.25 handle. However, there is a massive amount of noise between here and there, so I think it’s going to be easier for the market to rise then fall.
USD/CAD Remains Rangebound On US Bank Holiday
Volatility has slowed in the currency markets as US traders are off in observance of Martin Luther King Day. USD/CAD fell into a range in late trading on Thursday and remains rangebound.
Last week’s volatility came as a result of the Trump press conference and triggered a sharp drop in the USD/CAD exchange rate. There was a sharp reversal following an intraday decline below the 200 DMA on Thursday, but upside momentum was short-lived.
The currency pair fell through important support last week as a declining trendline that originates from the low posted in May was breached. The 200-period daily moving average falls below the declining trendline and is seen as a last line in the sand for the currency pair in terms of the bullish trend that developed in the second half of 2016.
While volatility has been subdued to start out the new week, there are several risk events that stand to move USD/CAD this week. The Presidential inauguration, the Bank of Canada meeting, and the US consumer price index release are seen as the highlights. With the week expected to be volatile, a technical break is likely to materialize.
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USD/CAD: BoC On Hold This Week; Fade Any Hawkish Reaction
We expect the Bank of Canada (BoC) to leave the benchmark overnight rate steady at 0.5% at the January meeting. We have long felt that the risks of outright easing in Canada are underpriced. While we still feel that market pricing of a 50% probability of a Bank of Canada rate hike in 2017 is offside, the most recent economic indicators relating to trade and business investment were stronger than expected, and for now are consistent with the Bank of Canada maintaining its current stance. The January meeting will be accompanied by a new Monetary Policy Report and a press conference by BoC Governor Poloz.
With the market pricing in essentially no change in rates already, any market reaction will likely be due to any change in the tone of the report.
We anticipate slightly more constructive language on the global growth picture and on trade and investment, given the latest data. But, as the Bank did in the December statement, we expect the BoC statement to lean against the increase in short-term interest rates that has come alongside a similar tightening in the US and may reference softer inflation data, still persistent labor market slack, and new macro prudential measures.
As a result, the message may come off as mixed. We would prefer to fade any hawkish reaction given our still bearish CAD view.
source
BoC Preview: Bank of Canada Faces Mixed Outlook, Optimism Dented By Inflation Trends
There is a strong probability that interest rates will be left at 0.50% following Wednesday’s Bank of Canada policy meeting. Greater optimism surrounding the growth outlook is likely to be clouded by uncertainty and concern over inflation trends. Given the high degree of domestic and US uncertainty, the bank is likely to adopt a neutral policy. With optimism surrounding growth, there is little value being long USD/CAD into the announcement, but with scope to buy any immediate moves lower.
The Bank of Canada will announce the latest policy decision alongside the policy summary. It will also release its latest Monetary Policy Report and Governor Poloz will hold a press conference.
Market expectations are for monetary policy to be left on hold.
The Bank of Canada has had mixed economic data to focus on since the last policy meeting which will certainly complicate their analysis.
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