Canadian Dollar: USD/CAD (CAD=X) traders are keeping a close watch on U.S./China trade developments

Canadian Dollar: USD/CAD (CAD=X) traders are keeping a close watch on U.S./China trade developments

Canadian Dollar: USD/CAD (CAD=X) traders are keeping a close watch on U.S./China trade developments

The Canadian dollar continues to drift within its well-defined USD/CAD trading band of $1.3240-$1.3340. The release of the September 18 U.S. Federal Open Market Committee (FOMC) meeting minutes is unlikely to offer any information or insight that would lead to a range breakout.

Canadian dollar traders are keeping a close watch on U.S./China trade developments. The U.S. Commerce Department added 28 Chinese companies and agencies to its list of firms banned from doing business in the U.S.. It also announced new visa restrictions on some Chinese officials that they claim are responsible for human rights violations. Chinese officials were a tad unhappy. A Chinese official said, “Xinjiang affairs are purely China’s internal affairs that allow no foreign interference. We urge the US to correct its mistakes at once and stop its interference in China’s internal affairs.”

Nevertheless, the Chinese trade delegation did not cancel the trade talks that are scheduled on October 11, in Washington, which raised hopes for some progress on the trade war front. That news underpinned the antipodean currencies and the Canadian dollar.

The British pound traded erratically overnight because of numerous and conflicting Brexit rumours. GBP/USD traded rather quietly in Asia, drifting down to $1.2199 from $1.2220. Things got lively when the European session kicked off. GBP/USD soared to $1.2290 following rumours that the European Union (E.U.) would grant major concessions around the Irish border issue. Another rumour had the E.U. offering to extend the Brexit deadline. Both were denied, and GBP/USD dropped like a rock, hitting $1.2207. The GBP/USD fall sparked some CAD demand from GBP/CAD selling.

EURUSD managed to squeeze higher, rising from $1.0954 to $1.0989 on the back of broad U.S. dollar weakness following Fed Chair Jerome Powell’s speech, yesterday. Powell addressed the issue of extreme volatility in the overnight repo market that occurred in September. He said the spike in overnight interest rates from unexpected volatility made it clear the Fed needed a sufficient quantity of reserves in the banking system. To avoid a repeat of the overnight repo issues he said, “we will begin increasing our securities holdings to maintain an appropriate level of reserves.”

If you think that means quantitative easing, you would be wrong, according to Powell. He said, “I want to emphasize that growth of our balance sheet for reserve management purposes should in no way be confused with the large-scale asset purchase programs that we deployed after the financial crisis. Neither the recent technical issues nor the purchases of Treasury bills we are contemplating to resolve them should materially affect the stance of monetary policy, to which I now turn.”

The U.S. data calendar is light and the FOMC minutes are due this afternoon, which suggests a somewhat subdued morning trading session.

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

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.

A doji star occurred (where a doji gaps above or below the previous candle). This often signals a reversal with confirmation occurring on the next bar.

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 82.5756. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 2 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 59.66. 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 69 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 104.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 1 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 6 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.000 at 1.333. Volume was 98% below average (consolidating) and Bollinger Bands were 42% narrower than normal.

Open     High      Low     Close     Volume___
1.333 1.334 1.333 1.333 1,217
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.33 1.33 1.33
Volatility: 5 5 6
Volume: 59,889 70,063 86,603

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 0.4% above its 200-period moving average and is in an upward trend. Volatility is low 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 bullish on CAD= and have had this outlook for the last 5 periods.

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