Canadian Dollar: USD/CAD (CAD=X) higher following a surprisingly hawkish tone to the Bank of Canada (BoC) monetary policy statement
The Canadian dollar soared yesterday, following a surprisingly hawkish tone to the Bank of Canada (BoC) monetary policy statement. The BoC left interest rates unchanged, as expected but it had a somewhat optimistic economic outlook. The statement said, “there is nascent evidence that the global economy is stabilizing, with growth still expected to edge higher over the next couple of years.”
The bank also said the economy was operating near capacity and that inflation would increase in the coming months. That forecast is hardly a recipe for a rate cut anytime soon. USD/CAD plunged from $1.3275 to $1.3179 and then spent the overnight session in a $1.3179-$1.3202 range.
Traders are waiting patiently for Bank of Canada Deputy Governor Timothy Lane’s speech this morning, in Ottawa. He is expected to clarify the bank’s outlook and may downplay the optimistic outlook and focus on the economic risks. The statement pointed out that “ongoing trade conflicts and related uncertainty are still weighing on global economic activity and remain the biggest source of risk to the outlook.” If he does, USD/CAD may recoup some of its losses.
Today’s U.S. data includes weekly Jobless Claims, Trade balance, and Factory Orders. Canada releases Ivey Purchasing Managers Index and Merchandise trade.
Overall, the bias in prices is: Sideways.
By the way, prices are vulnerable to a correction towards 1.32.
The projected upper bound is: 1.33.
The projected lower bound is: 1.31.
The projected closing price is: 1.32.
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 22 white candles and 27 black candles for a net of 5 black candles.
Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.
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 18.3559. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 9 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 40.09. 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 109 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 -200.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 7 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 1 period(s) ago.
Rex Takasugi – TD Profile
FOREX CAD= closed down -0.003 at 1.317. Volume was 29% below average (neutral) and Bollinger Bands were 34% narrower than normal.
Open High Low Close Volume___
1.320 1.320 1.315 1.317 48,352
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 1.33 1.32 1.33
Volatility: 5 5 6
Volume: 47,548 63,937 78,727
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 0.8% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. Our volume indicators reflect volume flowing into and out of CAD= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on CAD= and have had this outlook for the last 17 periods.