Canadian Dollar: USD/CAD (CAD=X) inflation is expected to slip below target

Canadian Dollar: USD/CAD (CAD=X) inflation is expected to slip below target

Canadian Dollar: USD/CAD (CAD=X) inflation is expected to slip below target

The latest look at Canadian inflation today is expected to show price pressures easing in July from 2% down to 1.7%, while the core reading is expected to nudge 0.1% lower to 2.1%. If either of these expectations are missed on the downside, markets will continue to price in a 0.25% interest rate cut at the next Bank of Canada meeting on September 4.

While the Canadian economy remains strong, it is not immune to what is happening across the border in the US where US President Donald Trump is pushing the Federal Reserve to cut interest rates by more than the central bank is currently signaling. A 0.25% US rate cut is fully expected at the September 17-18 FOMC meeting and BoC governor Stephen Poloz may pre-empt the Fed if he feels that the domestic economy will suffer further from the global economic slowdown.

The latest FOMC minutes will be released later today and will be closely monitored for any language on the future path of interest rates. At this meeting the Fed cut rates by 0.25%, calling it a ‘mid-cycle adjustment’ and traders will want to see if anything has changed since then. Powell will also be speaking at the Jackson Hole Symposium on Friday and may use this stage to give a further steer on the US economy and any necessary monetary policy reaction.

Technical Indicators

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.34.

The projected lower bound is: 1.32.

The projected closing price is: 1.33.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 24 white candles and 26 black candles for a net of 2 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 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 54.8480. This is not an overbought or oversold reading. The last signal was a sell 17 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 56.22. 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 34 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 28. This is not a topping or bottoming area. The last signal was a sell 1 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 buy 32 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.001 at 1.328. Volume was 99% below average (consolidating) and Bollinger Bands were 12% narrower than normal.

Open     High      Low     Close     Volume___
1.329 1.329 1.328 1.328 627
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.33 1.32 1.33
Volatility: 5 6 7
Volume: 63,279 69,644 88,724

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 0.2% below its 200-period moving average and is in an upward trend. Volatility is 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 20 periods.

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