Canadian Dollar: USD/CAD (CAD=X) traders digesting Bank of Canada monetary policy meeting

Canadian Dollar: USD/CAD (CAD=X) traders digesting  Bank of Canada monetary policy meeting

Canadian Dollar: USD/CAD (CAD=X) traders digesting Bank of Canada monetary policy meeting

The Canadian dollar inched higher overnight, despite a somewhat risk-averse environment. Canadian dollar traders were digesting today’s Bank of Canada monetary policy meeting and Governor Stephen Poloz’s press conference.

Back in the summer, analysts were forecasting that the BoC would cut rates in October. It didn’t happen. They penciled in a December cut which has since been erased. They now expect the BoC to leave rates unchanged in the first quarter of 2020. The BoC, along with the rest of the world’s major central banks, blamed trade tensions as the critical reason for downside risks to their economic outlook. Those tensions have not abated, but there are rumours that a U.S./China Phase-One deal is close. If so, the BoC will be reluctant to alter monetary policy at this juncture.

The Canadian dollar outperformed the Antipodean currencies overnight, despite the plunge in oil prices. West Texas Intermediate dropped from $58.15 U.S./barrel to $55.10 U.S./b after the American Petroleum Institute said that U.S. crude inventories fell by 3.7 million barrels in the week ended November 29. The drop was exacerbated by President Trump suggesting that a trade deal would not be signed until after the U.S. elections in November 2020. Prices recovered and touched $57.12 in Toronto trading, on a positive trade story.

A Bloomberg article claimed that despite the noise and the hostile rhetoric, China and the U.S. trade negotiators were very close to agreeing on the amount of tariffs that would be rolled back in a Phase 1 deal. The article also said the negotiators were striving to have the deal completed before the December 15 tariff increase goes into effect.

Today’s US data includes Institute for Supply Management non-manufacturing PMI and ADP employment reports which will be overshadowed by Trump tweets and trade news. The Bank of Canada meeting was the Canadian highlight.

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: 1.33.

The projected lower bound is: 1.31.

The projected closing price is: 1.32.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 22 white candles and 27 black candles for a net of 5 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 17.8248. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 9 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 43.29. 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 109 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 -168.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 7 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 1 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.000 at 1.320. Volume was 99% below average (consolidating) and Bollinger Bands were 38% narrower than normal.

Open     High      Low     Close     Volume___
1.320 1.320 1.319 1.320 393
Technical Outlook 
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish
Moving Averages: 10-period     50-period     200-period
Close: 1.33 1.32 1.33
Volatility: 5 5 6
Volume: 42,752 62,978 78,487

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 0.6% below 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 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 17 periods.

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