Canadian Dollar: USD/CAD (CAD=X) Focus on Bank of Canada meeting
The Canadian dollar wasn’t paid any heed overnight. The rest of the G-10 major currencies didn’t fare much differently due to caution ahead of the U.S. Federal Open Market Committee (FOMC) meeting, and Bank of Canada meeting tomorrow. Nevertheless, a speech by Reserve Bank of Australia Governor Philip Lowe and ongoing Brexit issues provided traders with a bit of a distraction.
Lowe gave AUD/USD a boost when he suggested that domestic interest rates would not go into negative territory. He said “The Board is prepared to ease monetary policy further if needed. Having said that, it is extraordinarily unlikely that we will see negative interest rates in Australia. It is likely though that we will require an extended period of low interest rates to reach full employment and for inflation to be consistent with the target.” AUDUSD climbed to $0.6858 from $0.6837.
U.S. President Trump gave risk sentiment a boost yesterday, when he said, “We are looking probably to be ahead of schedule to sign a very big portion of the China deal, and we’ll call it phase one but it’s a very big portion.” His comments led to small gains in New Zealand and Canadian dollars and sparked a bit of unwinding of safe-haven trades. The Swiss franc and Japanese yen drifted lower.
Asia traders focused on British politics. U.K. Members of Parliament voted on Prime Minister Boris Johnson motion for an early election. To succeed, Johnson needed 430 votes (a two/thirds majority). He received only 299. GBP/USD dropped to 1.2808 from 1.2860. His fourth attempt may be the winner. This morning, opposition leader Jeremy Corbyn said Labour wouldn’t oppose the latest bill, which points to a December election.
USD/JPY continued to consolidate its October gains. Prices bounced inside a 108.84-109.06 range overnight, moving in concert with broad U.S. dollar sentiment and U.S. Treasury yields. A fall in U.S. one-year Treasury yields to 1.833% from 1.858% knocked USDJPY from the top, but the drop was tiny. Traders are awaiting the Bank of Japan monetary policy meeting on Thursday.
EUR/USD continued to see-saw in a narrow $1.1075-$1.1101 range. Traders turned bullish with the break above $1.1050 two weeks ago but the lack of sustained gains above 1.1160, tempered their enthusiasm. Broadly weak euro-zone economic data and the dovish European Central Bank monetary policy outlook are capping gains. Also, prices are weighed down by concerns that the FOMC may follow a rate cut with guidance suggesting that “mid-cycle” adjustments are finished.
Today’s U.S economic reports include Consumer Confidence, and Case-Shiller Home Price index. The Canadian calendar is empty.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.32.
The projected upper bound is: 1.32.
The projected lower bound is: 1.30.
The projected closing price is: 1.31.
A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 25 white candles and 25 black candles.
A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.
Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 47.9075. This is not an overbought or oversold reading. The last signal was a buy 1 period(s) ago.
Relative Strength Index (RSI)
The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 36.71. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a buy 83 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -54. This is not a topping or bottoming area. The last signal was a buy 3 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 13 period(s) ago.
Rex Takasugi – TD Profile
FOREX CAD= closed down -0.000 at 1.308. Volume was 99% below average (consolidating) and Bollinger Bands were 66% wider than normal.
Open High Low Close Volume___
1.309 1.309 1.307 1.308 794
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.31 1.32 1.33
Volatility: 4 5 6
Volume: 63,017 67,209 84,815
Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.
FOREX CAD= is currently 1.4% below its 200-period moving average and is in an downward trend. Volatility is extremely low when compared to the average volatility over the last 10 periods. There is a good possibility that there will be an increase in volatility along with sharp price fluctuations in the near future. Our volume indicators reflect moderate flows of volume out of CAD= (mildly bearish). Our trend forecasting oscillators are currently bearish on CAD= and have had this outlook for the last 10 periods.