Canadian Dollar: USD/CAD (CAD=X) Risks Tilted To Downside Ahead Of Bank Of Canada Meeting

Canadian Dollar: USD/CAD (CAD=X) Risks Tilted To Downside Ahead Of Bank Of Canada Meeting

Canadian Dollar: USD/CAD (CAD=X) Risks Tilted To Downside Ahead Of Bank Of Canada Meeting

“The Bank of Canada meets tomorrow, and we expect no change in the monetary stance (in line with consensus). However, we suspect markets have too aggressively priced out BoC easing and the balance of risks for CAD appears tilted to the downside” ING

The Canadian Dollar remains one of the market’s more appealing currencies. The currency was resilient amid months of US-China trade jitters due to its stronger correlation with the US Dollar (USD), as well as hopes that the Bank of Canada (BoC) would avoid cutting Canadian interest rates even as other major central banks cut rates. However, its lasting strength is causing fresh uncertainty in recent sessions, amid concerns that the Bank of Canada could bring up the currency’s strength.

Even as rival currencies like the US Dollar (USD) recover, CAD remains relatively close to highs.

Last week saw USD/CAD edge higher throughout the week, as the US Dollar rebounded on strong US data and US-China trade hopes. Gains were limited by CAD resilience though.

GBP/CAD, on the other hand, slipped last week. Even as the Pound attempted to recover, the strong Canadian Dollar benefitted from poor UK data and pushed GBP/CAD lower on Friday.

Canadian Dollar Exchange Rates Struggle for Direction as Bank of Canada (BoC) Anticipated

The Canadian Dollar is starting this week off a little weaker, as investors speculate over the sort of tone the Bank of Canada (BoC) will take at its upcoming policy decision.

The BoC is one of the few major central banks that has not taken a dovish tone over monetary policy or cut interest rates over the past couple years. This has left the bank seeing a lot of attention from global markets.

Some small signs of weakness in Canadian ecostats are not expected to be enough to pressure the BoC to cut interest rates either. Analysts widely expect that the bank will leave policy frozen once again this week.

However, there are some concerns that the BoC will make comments on the Canadian Dollar’s recent strength. As the Canadian Dollar has been a strong performer over the past years, concerns are rising that continued strength could damage Canada’s outlook.

According to Bipan Rai, North American Head of FX Strategy at CIBC Capital Markets:

‘We do expect that the ‘Loonie’ may make an appearance in the statement with respect to how the CAD has appreciated versus other currencies,’

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.31.

The projected upper bound is: 1.31.

The projected lower bound is: 1.29.

The projected closing price is: 1.30.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 21 white candles and 28 black candles for a net of 7 black 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 41.6667. This is not an overbought or oversold reading. The last signal was a buy 11 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 43.56. 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 9 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 56. This is not a topping or bottoming area. The last signal was a buy 9 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 7 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.002 at 1.304. Volume was 36% below average (neutral) and Bollinger Bands were 9% narrower than normal.

Open     High      Low     Close     Volume___
1.306 1.307 1.304 1.304 37,039
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.30 1.32 1.32
Volatility: 3 4 5
Volume: 52,588 48,213 67,859

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 1.5% below its 200-period moving average and is in an downward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. 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 26 periods.

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