USD/CAD (CAD=X) Strength on USD Weakness May Be Temporary

USD/CAD (CAD=X) Strength on USD Weakness May Be Temporary

USD/CAD (CAD=X) Strength on USD Weakness May Be Temporary

  • Canadian dollar at C$1.3142, or 76.09 U.S. cents
  • Loonie hits strongest level since June 15, at C$1.3113
  • Price of U.S. oil rises 0.3 percent
  • Bond prices fall across the yield curve

The Canadian dollar steadied against its U.S. counterpart on Wednesday while holding near its strongest level in nearly three weeks, as oil prices rose and investors braced for a potential interest rate hike next week from the Bank of Canada.

At 3 p.m. EDT (1900 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at C$1.3142 to the greenback, or 76.09 U.S. cents.

The price of oil, one of Canada’s major exports, was driven higher by a threat to supply from an Iranian commander and a drop in U.S. crude inventories for a second week in a row.

U.S. crude oil futures CLc1 rose 0.3 percent to $74.33 a barrel.

Right now we have many problems on the oil supply side … and we may see high prices for a few more months.

The higher price of oil and an expectation in the market that the Bank of Canada will raise interest rates next week have boosted the loonie.

Money markets see about a 70 percent chance of a rate increase at the July 11 announcement.

Expectations have been raised by hawkish comments last week by Bank of Canada Governor Stephen Poloz and recent domestic data that showed business optimism and stronger-than-expected growth in Canada’s economy.

Overall, the bias in prices is: Sideways.

By the way, prices are vulnerable to a correction towards 1.30.

The projected upper bound is: 1.33.

The projected lower bound is: 1.30.

The projected closing price is: 1.31.

Candlesticks

During the past 10 bars, there have been 5 white candles and 4 black candles for a net of 1 white candles. During the past 50 bars, there have been 32 white candles and 16 black candles for a net of 16 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 11.9939. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 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 51.78. 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 5 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 -102.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 8 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 4 period(s) ago.

Rex Takasugi – TD Profile

FOREX CAD= closed up 0.000 at 1.314. Volume was 99% below average (consolidating) and Bollinger Bands were 13% wider than normal.

Open High Low Close Volume___
1.314 1.314 1.314 1.314 939

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 1.32 1.30 1.28
Volatility: 8 8 9
Volume: 80,082 88,424 81,598

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 3.0% 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 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 15 periods.

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