Canadian Dollar: USD/CAD (CAD=X) Underpinned by Crude Prices

Canadian Dollar: USD/CAD (CAD=X) Underpinned by Crude Prices

Canadian Dollar: USD/CAD (CAD=X) Underpinned by Crude Prices

The Canadian dollar crept higher yesterday despite the domestic inflation data giving the Bank of Canada another excuse to reduce interest rates. USD/CAD closed at $1.3220 yesterday supported in part by West Texas Intermediate oil prices jumping 8.3% since February 10.

Statistics Canada reported Consumer Price Index rose 2.4% y/y in January, which bettered the 2.3% forecast and the 2.2% y/y result for December. The bulk of the move was due to an increase in gasoline prices. However, core-inflation dipped from 2.1% y/y in December to 2.0% y/y in January.

The Canadian dollar rallied stalled in Asia and prices slipped right into the Toronto open. The U.S. dollar was in demand during the overnight session, and that demand finally impacted the Canadian dollar, even though crude oil prices were still near session highs.

Canadian dollar outperformance was evident in Asia, where the Australian and New Zealand dollars were sold.

Canadian dollar price action will continue to track U.S. dollar sentiment and oil price movements.

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: 1.32.

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 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 28 white candles and 22 black candles for a net of 6 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.

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 50.7170. This is not an overbought or oversold reading. The last signal was a sell 8 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 56.20. 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 8 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 -37. This is not a topping or bottoming area. The last signal was a buy 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 sell 5 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed down -0.000 at 1.325. Volume was 99% below average (consolidating) and Bollinger Bands were 39% narrower than normal.

Open     High      Low     Close     Volume___
1.326 1.326 1.325 1.325 610
Technical Outlook 
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 1.33 1.31 1.32
Volatility: 4 4 5
Volume: 42,650 47,626 63,690

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 0.3% 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 22 periods.

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