Home FX CAD Canadian Dollar: USD/CAD (CAD=X) Stimulated

Canadian Dollar: USD/CAD (CAD=X) Stimulated

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Canadian Dollar: USD/CAD (CAD=X) Stimulated

The Canadian dollar outperformed its G-10 major currency peers in overnight trading, thanks to U.S. President Trump’s stimulus plans. Trump is expected to announce measures to alleviate some of the impacts to hourly workers from the coronavirus. He said, “We’re going to be talking about hourly wage earners getting help so that they can be in a position where they’re not going to ever miss a paycheck.” The stimulus may be in the form of a payroll tax cut and funding of sick leave.

The U.S. is not acting alone. The governments of Australia, Japan, Italy, and even Germany have announced various plans to help their citizens. Italy said it would suspend mortgage payments and placed travel restrictions across the entire country.

Signs that the coronavirus can be beaten gave financial markets some support. Chinese President Xi Jinping visited Wuhan, which was ground zero for the outbreak. His visit coincided with the announcement of the closure of all temporary hospitals in that area. Apple said that 38 of its 42 Chinese retail stores have reopened.

Beleaguered oil traders took solace from the news and West Texas Intermediate prices jumped nearly 11%. Russia’s oil minister said that they hadn’t excluded new joint measures with the Organization of the Petroleum Exporting Countries, which also supported prices. However, gains were capped when Saudi Aramco said its crude shipments would rise to 12.3 million barrels per day in April.

The jump in oil prices provided some support to the Canadian dollar, even though at current levels, prices are decimating the domestic oil industry and suggest negative Q1 2020 Gross Domestic Product growth.

U.S. stimulus chatter, Wall street price action and oil price movements are the focus today. There are not any economic reports of note on tap.

Technical Indicators

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 1.33.

The projected upper bound is: 1.39.

The projected lower bound is: 1.36.

The projected closing price is: 1.37.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 9 white candles and 1 black candles for a net of 8 white candles. During the past 50 bars, there have been 34 white candles and 16 black candles for a net of 18 white candles.

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 85.1685. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 7 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 80.76. This is where it usually tops. The RSI usually forms tops and bottoms before the underlying security. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 21 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 175.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 3 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 9 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.001 at 1.373. Volume was 80% below average (consolidating) and Bollinger Bands were 155% wider than normal.

Open     High      Low     Close     Volume___
1.372 1.374 1.370 1.373 11,076
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.35 1.32 1.32
Volatility: 12 7 6
Volume: 87,876 60,689 63,830

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 3.9% above 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 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 35 periods. Our momentum oscillator is currently indicating that CAD= is currently in an overbought condition.

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S. Jack Heffernan Ph.D. Economist at Knightsbridge holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Crypto, Mining, Shipping, Technology and Financial Services.