Canadian Dollar: USD/CAD (CAD=X) higher as traders digest the disappointing U.S. retail sales data

Canadian Dollar: USD/CAD (CAD=X) higher as traders digest the disappointing U.S. retail sales data

Canadian Dollar: USD/CAD (CAD=X) higher as traders digest the disappointing U.S. retail sales data

The Canadian dollar finally found some support overnight, after free-falling since Tuesday, and it had nothing to do with any domestic reasons.

Canadian dollar direction, like the rest of the G-10 majors, continues to be dictated by broad U.S.-dollar sentiment. That sentiment shows a preference to buy greenbacks.

USDCAD touched $1.3865 on April 14 and hit $1.4135 overnight as weak crude oil prices, and bullish U.S. dollar sentiment underpinned prices.

Wednesday’s Bank of Canada policy meeting was a non-event for FX traders, as G-7 central bank monetary policy initiatives are well-coordinated. The BoC cut rates three times in March which removed the impetus for any rate action.

They were content to leave rates unchanged, noting that the current rate of 0.25 percent, is considered “its effective lower bound.”

The BoC announced an expanded Quantitative Easomg program. It will increase the amount of Treasury Bills bought at auction and announced new Provincial and Corporate bond buying programs.

The BoC said that it was not providing their usual forecasts but instead offered forecast ranges. The governors said “Bank analysis of alternative scenarios suggests the level of real activity was down 1-3 percent in the first quarter of 2020 and will be 15-30 percent lower in the second quarter than in fourth-quarter 2019. CPI inflation is expected to be close to 0 percent in the second quarter of 2020. This is primarily due to the transitory effects of lower gasoline prices.”

Canadian dollar traders largely ignored the BoC comments and focused on U.S. dollar sentiment. The major U.S. equity indexes were sinking alongside oil prices, which put a risk aversion bias into FX trading. The U.S. Energy Information Administration (EIA) said U.S. crude inventories surged to19.1 million barrels in the previous week.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 1.44.

The projected lower bound is: 1.38.

The projected closing price is: 1.41.

Candlesticks

A white body occurred (because prices closed higher 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 27 white candles and 23 black candles for a net of 4 white candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

Momentum Indicators

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.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 77.9786. This is not an overbought or oversold reading. The last signal was a buy 2 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 55.13. 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 sell 17 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 7. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 16 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.002 at 1.410. Volume was 39% below average (neutral) and Bollinger Bands were 18% wider than normal.

Open High Low Close Volume___
1.408 1.410 1.400 1.410 46,758
Technical Outlook
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 1.40 1.38 1.33
Volatility: 12 15 9
Volume: 107,107 98,796 70,700

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.

Summary

FOREX CAD= is currently 5.7% above 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 volume flowing into and out of CAD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on CAD= and have had this outlook for the last 4 periods.

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