Canadian Dollar: USD/CAD (CAD=X) look for loonie weakness

Canadian Dollar: USD/CAD (CAD=X) look for loonie weakness

Canadian Dollar: USD/CAD (CAD=X) look for loonie weakness

The oars aren’t rowing in the same direction for the Canadian dollar, but over the medium term, look for loonie weakness as domestic fundamentals take over from international forces. The latter pertain to the general trend in the US dollar against other majors, where 2020 should feature a weaker greenback as the Fed opens the door to at least one rate cut after a final hike in the latter half of 2019. Generally, a softer DXY tends to be associated with Canadian dollar appreciation.

The Bank of Canada still seems inclined to find an excuse to hike rates, with one final hike possible in Q3 after an oil production recovery shows up in temporarily better GDP prints. That will keep the Canadian dollar betterbid, towards a 1.31 low for dollar-Canada this summer. But made-in-Canada forces should put the BoC back on hold, leaving trade fundamentals to send the Canadian dollar to weaker levels over our forecast horizon.

Our recent analysis of these trade troubles makes the case that a 1.40 handle on dollar-Canada will eventually be needed to gradually restore export competitiveness. We’ve weakened our targets for the loonie in 2020 as a result, calling for a 1.36 dollar Canada to close out 2020. In addition to a wide current account deficit that helps pull the loonie that way on its own, beyond 2020, we might also get help from a more dovish Bank of Canada to generate a weaker CAD.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 1.34.

The projected lower bound is: 1.31.

The projected closing price is: 1.32.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 5 black candles for a net of 1 black candles. During the past 50 bars, there have been 27 white candles and 22 black candles for a net of 5 white candles.

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 38.8777. 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 47.82. 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 37 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 -12. This is not a topping or bottoming area. The last signal was a buy 13 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 11 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.000 at 1.323. Volume was 95% below average (consolidating) and Bollinger Bands were 27% narrower than normal.

Open High Low Close Volume___
1.323 1.324 1.322 1.323 4,131

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.33 1.32
Volatility: 6 7 8
Volume: 97,926 91,831 88,640

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 0.6% above its 200-period moving average and is in an upward 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 bullish on CAD= and have had this outlook for the last 4 periods.

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