Canadian Dollar: USD/CAD (CAD=X) Suffering from Pandemic Worries

Canadian Dollar: USD/CAD (CAD=X) Suffering from Pandemic Worries

Canadian Dollar: USD/CAD (CAD=X) Suffering from Pandemic Worries

All it took was for the U.S. Centers for Disease Control and Prevention to issue a press release, warning that the coronavirus could cause a pandemic, to spark panic on Wall Street yesterday. That set the tone for equity and FX markets overnight and kept the Canadian dollar on the defensive as a result.

The Dow Jones Industrial Average (DJIA) plunged 3.15%, S&P 500 lost 3.03%, and the NASDAQ gave up 2.77% by the time U.S. stock markets closed yesterday. The plunge spooked traders in Asia, and even though the major equity indexes closed with losses, they were far less dramatic than the American experience. European bourses sank at their open, but prices are well off their lows. US equity futures are suggesting gains to start the day.  

The South China Morning Post said there were 81,184 confirmed coronavirus cases worldwide, with South Korea, the Diamond Princess cruise ship, and Italy with the most cases, outside of China.  

Markets are pricing in two U.S. Federal Reserve rate cuts in 2020, which is a marked change from January when no cuts were expected. Traders expect the Fed to react to counter the risk of an economic downturn because of COVID-19. However, yesterday, Fed Vice Chair Richard Clarida threw cold water on that notion when he said, “it is still too soon to even speculate about either the size or the persistence of these effects, or whether they will lead to a material change in the outlook.”

President Trump is blaming the media for the market reaction to COVID-19. “He said Low Ratings Fake News MSDNC (Comcast) & @CNN are doing everything possible to make the Caronavirus look as bad as possible, including panicking markets, if possible. Likewise their incompetent Do Nothing Democrat comrades are all talk, no action. USA in great shape!”

Trump has a point. San Francisco Mayor London Breed appears to have over-reacted when declaring a “local emergency.” San Francisco does not have any reported COVID-19 cases.

Technical Indicators

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.32.

The projected upper bound is: 1.34.

The projected lower bound is: 1.32.

The projected closing price is: 1.33.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 29 white candles and 21 black candles for a net of 8 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 81.8697. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 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 61.32. 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 11 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 105.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 2 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 sell 8 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.004 at 1.331. Volume was 45% above average (neutral) and Bollinger Bands were 52% narrower than normal.

Open     High      Low     Close     Volume___
1.328 1.333 1.327 1.331 78,538
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.33 1.32 1.32
Volatility: 5 4 5
Volume: 54,145 50,221 63,814

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 0.8% 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 25 periods.

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