Canadian Dollar: USD/CAD (CAD=X) Slumps As BOC Governor Signals Confidence

Canadian Dollar: USD/CAD (CAD=X) Slumps As BOC Governor Signals Confidence

Canadian Dollar: USD/CAD (CAD=X) Slumps As BOC Governor Signals Confidence

Positive Signal from BOC Governor Drives US Dollar Canadian Dollar (USD/CAD) Exchange Rate Lower

Comments from Bank of Canada (BOC) Governor Stephen Poloz prompted a sharp decline for the US Dollar to Canadian Dollar (USD/CAD) exchange rate on Thursday.

As Poloz indicated that he sees Canada’s current monetary conditions as ‘about right’ this prompted markets to slash the odds of any future BoE interest rate cuts.

With the BOC looking likely to remain on hold in the months ahead the mood towards the Canadian Dollar picked up markedly, in spite of a disappointing ADP employment change figure.

Even though October saw a -22,600 fewer Canadians in employment this was not enough to offset the positive impact of Poloz’s signal of confidence, leaving CAD exchange rates on a stronger footing.

Signs of Fed Steadiness Fail to Encourage US Dollar Demand

Although October’s Federal Open Market Committee (FOMC) minutes indicated a willingness to remain on hold in the coming months this did little to boost the appeal of the US Dollar.

As the central bank remains under pressure from the White House and trade relations between the US and China show no clear signs of improvement support for USD exchange rates proved limited.

October’s CB leading index offered investors little cause for confidence, meanwhile, as it remained steady at -0.1%.

With the US economy looking set to shed further momentum in the fourth quarter USD exchange rates struggled to find any particular traction.

Canadian Retail Sales Rebound Set to Lift CAD Exchange Rates

The USD/CAD exchange rate could come under further pressure on Friday as forecasts point towards a rebound in September’s Canadian retail sales data.

As markets expect to see monthly sales growth of 0.1%, reversing the previous month’s -0.1% contraction, the Canadian Dollar may find a fresh leg up against its rivals.

A recovery in consumer confidence could encourage a greater sense of optimism in the economic outlook, in spite of the underwhelming employment data.

On the other hand, evidence that consumers are continuing to rein in their spending may be enough to dent the upward momentum of CAD exchange rates.

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 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 26 white candles and 23 black candles for a net of 3 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 79.3473. This is not an overbought or oversold reading. The last signal was a sell 5 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 61.23. 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 99 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 129.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 4 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 15 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.002 at 1.328. Volume was 21% below average (neutral) and Bollinger Bands were 22% wider than normal.

Open     High      Low     Close     Volume___
1.330 1.332 1.327 1.328 54,688
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.32 1.32 1.33
Volatility: 4 5 6
Volume: 61,600 68,610 81,903

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 0.1% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume into CAD= (mildly bullish). Our trend forecasting oscillators are currently bullish on CAD= and have had this outlook for the last 7 periods.

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