USDCAD breaching lower ahead of BoCWill the BoC deliver a hawkish outcome for CAD to run toward 1.33?
BOC
AUDCAD LongsI'm liking AUDCAD longs for a few reasons. Technical wise we have broken structure and we have a fib at the 61.8 from the swing high to swing low.. Looking at everything from a fundamental standpoint, there is a lot of optimism around the Aussie gaining strength from China reopenings, as well as a Hawkish RBA. Canada on the other hand has decided to pause rates and might continue to do so if the BoC see that inflation is starting to decelerate as well. This trade might take some time as most aussie pairs are slower but overall I like this trade.
USDCAD, post BoC & PPI data releaseFundamental Analysis
Key points:
For the fourth day in a row, USD/CAD has been under some selling pressure on Thursday.
The USD is under pressure as a result of expectations for a pause in the Fed's rate-hike program.
Despite expectations that the Federal Reserve (Fed) is nearing the end of its rate-hiking cycle and turns out to be a key factor exerting pressure on the USD/CAD pair, selling of the US Dollar (USD) continues incessantly for the third consecutive day. In point of fact, the markets appear to be convinced that the US central bank will stop tightening its monetary policy after one more hike next month, as evidenced by the lower-than-expected US Producer Price Index (PPI) numbers released earlier today, Thursday 13th April 2023.
Technical Analysis
From a Technical Analysis standpoint, this is actually a follow-up from our initial bearish analysis that we shared on Friday 24 March (please see link at bottom of this analysis), since then price has been dropping (first top black arrow) from $1.38000 price level. Subsequently we shared another two updates on March 30th and April 3rd, explaining that we were anticipated a pullback and further drop from $1.35555 level (2nd lower black arrow), for more details, please feel free to go back and review those analysis. Since all that time our target was and still is the $1.31200 price zone as shown on weekly chart of the 30th March update.
So now, Price is coming to a zone from where it is likely to bounce off from and make another pullback, before moving down again. That pullback maybe deeper than expected, and we also don’t negate the fact that price may very well go through this level and if so that we should expect a bigger reaction from $1.33000 price level (see projections on chart). All in all, we believe USD/CAD is still bearish regardless if makes a pullback or creates some range in between.
US CPI and BoC Rate Today!A 6 day up move was broken yesterday with the Dollar falling below local support at 1.34900. The losses have continued today, however price looks to be holding as the market awaits the CPI and BoC rate news at 1:30pm and 3:00pm respectively. The Bloomberg's survey median forecast calls for a 0.4% increase in the core rate which if correct would lead to the expectation of a Fed hike once more this year.
From a technical perspective the key levels to watch are 1.35600 and 1.34100, which is the top and bottom of the 6 day move. Looking back at recent CPI releases, the reaction has been relatively muted if there isn't a big surprise. However if the data does surprise a 100 pip move isn't uncommon.
CADJPY Seen In A Fifth Wave-Time For A Rally? With crude trading at support, with inflation in Japan coming down to 3.3%, with XXX/JPY pairs seen in oversold/extended structures, with a wedge on USDJPY, with five waves down on CADJPY I think it can be time for some recovery. Stocks also hold support for now.
USDCAD Outlook 21 March 2023The USDCAD traded lower through the trading session yesterday as the DXY continued to weaken. The price reversed from the 1.3745 resistance level, down toward the key support level of 1.3650.
Today, the Canadian CPI is due to be released and is expected to indicate a slowdown in overall inflation growth with the Median CPI y/y (Forecast: 4.8% Previous: 5.0%) and the Trimmed CPI y/y (Forecast: 4.9% Previous: 5.1%).
Recently the Bank of Canada paused on its rate hikes, to allow time for the effects of the previous rate hikes to be reflected.
A slowdown in inflation growth would be supportive of their recent decision to pause and could reinforce a continuation of the decision. This could result in some strengthening of the Canadian dollar.
The USDCAD is likely to retrace to test the 1.37 round number level and 50% Fibonacci retracement level. However, if the USDCAD breaks below 1.3650, the next key support level would be at 1.3560.
USDCAD Outlook 9th March 2023Overnight, the Bank of Canada (BoC) released its decision to hold interest rates at the 4.50% level. This was in line with the overall market forecast.
However, the decision to hold rates saw the Canadian Dollar weaken (while the DXY remained on its bullish uptrend), resulting in the USDCAD claiming new highs, testing the 1.38 resistance area.
If the DXY gains further strength and breaks out to the upside, the USDCAD could first retrace briefly to test the upward trendline, before continuing to climb higher, with the next key resistance level at 1.39.
Alternatively, if the price action develops to signal a rejection of the 1.38 resistance level, the price could retrace down to the intermediate support level of 1.3740.
Canadian dollar eyes Ivey PMIThe Canadian dollar is coming off a relatively quiet week but that could change as there a host of key releases this week. Ivey PMI kicks things off later today, followed by the Bank of Canada rate decision on Wednesday and the February employment report on Friday.
Canada's Ivey PMI recorded a massive rebound in January, climbing from 33.4 all the way to 60.1 points. A reading above 50.0 points to expansion. The reading is expected to remain strong in February, with an estimate of 57.7 points.
Canada's economy ended 2022 in an unimpressive fashion, posting a growth rate of 0.0% y/y in the fourth quarter, compared to 2.3% in Q3. This was much lower than the market estimate of 1.5% and the Bank of Canada's projection of 1.3%. On a monthly basis, December GDP contracted by 0.1%, down from 0.0% in November and below the estimate of 0.0%.
The Bank of Canada meets on Tuesday and is widely expected to hold rates at 4.50%. A non-move would be significant, as the BoC hasn't taken a pause since the current rate-tightening cycle began in January 2023. Governor Macklem has signalled to the markets that he wants to take a pause in tightening, and the weak GDP report will support the BoC easing off the rate pedal as the economy shows signs of slowing. The steep hike in rates has pushed inflation lower, as it fell to 5.9% in January, down from 6.3% a month earlier.
What will the BoC do after tomorrow's rate decision? The BoC would love to pause rates throughout the year, but Macklem has made clear that a pause is dependent on supportive data. There is also the complication that the Federal Reserve is likely to continue hiking several more times this year, and the BoC does not want to fall too far out of sync with rate levels in the US.
In the US, this week's key events are Fed Chair Powell's semi-annual testimony before Congress and the nonfarm payroll report, both of which could move the US dollar. If Powell provides any hints about further rate hikes, the US dollar could respond with gains.
Nonfarm payrolls was red-hot in January with 517,000 new jobs, but this is expected to be a one-time bump, with the estimate for February standing at 200,000. The surprisingly resilient labour market has the Fed concerned about wage pressures, and a strong wage growth release could raise market expectations of higher rates.
1.3701 and 1.3784 are the next resistance lines
1.3571 is a weak support line, followed by 1.3478
Key news events for the weekIt might be a big week head for the markets.
Monday
CHF CPI data release. The inflation gauge for the Swiss is expected to be lower than previous, signaling a slowdown in inflation growth. Could result in some weakness in the CHF if markets anticipate no more rate hikes to come from the SNB.
Tuesday
Reserve Bank of Australia (RBA) interest rate decision. Another 25bps rate hike to come? However, the AUDUSD has often traded lower following the release of the news. Could the same thing happen again?
Fed Chair Powell testifies during the US session. This could lead to increased volatility on the DXY, but watch what Powell says! Pivot? Or continue with the rate increases?
Wednesday
Bank of Canada (BoC) is set to hold rates at 4.50%. Unlikely that we'll see a surprise given how recent Canadian CPI has been released lower than previous (signaling a possible reversal in inflation).
Friday
Bank of Japan (BoJ) is set to announce its monetary policy decision. This is Kuroda's last monetary policy meeting as Governor. While a surprise is unlikely, he might lay the foundations for his predecessor. Expect significant volatility on the Japanese Yen.
Since it is the first Friday of the month, look out for the release of the US Non-Farm Employment Change (NFP). The data shouldn't surprise like the previous month, however, some stability in the employment data could see markets reconsider the FOMC's stance on further rate hikes, leading the DXY to trade lower.
Whatever the news, watch out for my daily posts on the specific currency pairs as I update you on possible setups and price levels. Also, tune in to the Daily Live Stream at 3pm (GMT+8)!
USDCAD: Expecting a breakout and push up to 1.38With public holiday's in both USA and Canada tomorrow, I expect a quiet start to the week for this pair.
On Tuesday it's Canada CPI which has been falling. Bank of Canada have just paused its rate rises as it expects inflation to come down to around 3% by mid-year and 2% in 2024, so if inflation continues to fall this should be negative for the CAD.
On the other-hand, the DXY strength I've posted about in recent ideas seems to be materialising and I'm expecting a push up to test 105.2 - 105.6, particularly with the FED stating 'the battle with inflation certainly isn't won', and recent other economic data supporting the chances of the US avoiding recession. The FED still has room for manoeuvre and may be looking at another 0.5pt hike in the pending FMOC minutes, which will be good for the dollar.
From a technical perspective, price is bouncing off the 200MA (8hr) and above the 50MA and 100MA, which are about to cross, and so I am bullish bias.
If the fundamentals play out as I expect, I'll be looking to get in long on this pair before the breakout of a quick for a quick scalp, and then monitoring for a rise up to 1.38 following the break and retest.
USD/CAD eyes retail salesThe Canadian dollar is unchanged on Friday, trading at 1.3466 in the European session. We could see some volatility in the North American session, as Canada releases retail sales.
The markets are bracing for a downturn in retail sales for November, with a forecast of -0.5% m/m for the headline figure and -0.4% for the core rate. This follows a strong report in October, as the headline reading was 1.4% and core retail sales at 1.7%. If the releases are as expected or lower, it could be a rough day for the Canadian dollar.
Today's retail sales release is the final major event prior to the Bank of Canada's meeting on January 25th. The markets have priced in a 25-bp increase, but a hold is also a possibility, especially with December inflation falling to 6.3%, down from 6.8%.
The BoC has raised rates by some 400 basis points in the current rate-tightening cycle, which began in March 2022. Similar to the market outlook on the Fed's rate policy, there is significant speculation that the BoC could wind up its tightening at the first meeting of 2023 and then keep rates on hold.
The BoC has said that future hikes will be determined by economic data, and there are signs of strength in the economy despite the Bank's aggressive rate policy. GDP expanded by 2.9% in Q3 which was stronger than expected and job growth sparkled in December, with over 100,000 new jobs. The markets will be looking for clues about future rate policy from the rate statement and BoC Governor Macklem post-meeting comments.
1.3455 is a weak support line, followed by 1.3328
1.3582 and 1.3707 are the next resistance lines
Canadian dollar shrugs as CPI declinesIt has been a quiet day in the currency markets, and the Canadian dollar has followed suit. In the North American session, USD/CAD is trading at 1.3386, down 0.15%.
Inflation in Canada slowed to 6.3% y/y in December, down from 6.8% a month earlier and matching the consensus. On monthly basis, the decline was noticeable at -0.6%, compared to 0.0% in November and the forecast of -0.1%. Core CPI fell to 5.4% y/y, down from 5.8% in November and below the forecast of 6.1%. The driver of the drop in inflation was a sharp decline in gasoline prices. Food prices, however, remain high and rose by 11% in December, a slight improvement over the November read of 11.4%. The Canadian dollar shrugged off the drop in inflation and remains close to the 1.34 round-figure mark.
The drop in inflation suggests that the Bank of Canada's aggressive rate cycle is having the desired effect, although inflation remains much higher than the BoC's target of 2%. The BoC holds its rate meeting next week, and the markets have priced in a 25- basis point hike, which would bring the cash rate to 4.50%. If inflation continues to downtrend, the expected hike next week could signal the end of the current rate-tightening cycle.
The BoC has said that future hikes would be determined by economic data, and there are signs of economic strength despite the rate hikes. GDP is expected to rise 1.2% y/y in Q4 and job growth sparkled in December, with over 100,000 new jobs. The markets are expecting a 25-bp hike next week, but it's uncertain what the central bank has planned after that. The markets will be looking for clues about future rate policy from the rate statement and BoC Governor Macklem post-meeting comments.
USD/CAD is testing support at 1.3389. Below, there is support at 1.3328
1.3455 and 1.3546 are the next resistance lines
USD/CAD eyes Bank of Canada meetThe Canadian dollar is slightly lower on Tuesday. In the European session, USD/CAD is trading at 1.3620, up 0.24%.
The Bank of Canada has been aggressive in its tightening, including a whopping full-point hike in July, which brought the cash rate to 2.50%. The BoC has been gradually easing since then, raising rates by 75 bp and then 50 bp, bringing the cash rate to 3.75%. Will the trend continue on Wednesday? According to the markets, probably yes. There is a 72% chance of a 25 bp move, with a 28% likelihood of a second straight 50 bp move.
At the October meeting, there was a 50/50 split over whether the BoC would raise rates by 50 or 75 bp, and the Bank opted for the more conservative move. With the Canadian economy showing signs of slowing down amidst an uncertain global outlook, a modest 25-bp hike would make sense. Still, it must be remembered that inflation remains very high at 6.9% and the BoC has shown that it is willing to keep the rate pedal on the floor if necessary. If the BoC goes for the 50 bp increase, it would be viewed as a hawkish surprise which would likely boost the Canadian dollar.
What can we expect from the BoC in 2023? The terminal rate is projected at around 4.5%, which would mean several more rate hikes early in the New Year. Of course, rate policy will be heavily dictated by key data such as employment, consumer spending and inflation. In addition, the BoC will want to keep pace (or close to it) with the Federal Reserve, which is widely expected to raise rates by 50 bp next week.
USD/CAD is testing resistance at 1.3619. Above, there is resistance at 1.3762
There is support at 1.3502 and 1.3359
USD/CAD rises as retail sales slipThe Canadian dollar is in positive territory on Tuesday. In the North American session, USD/CAD is trading at 1.3400, down 0.39%.
The Canadian consumer was not in a spending mood in September, as retail sales declined by 0.5%, following a 0.4% gain a month earlier. The forecast stood at -0.4%. Core retail sales fell by 0.7%, worse than the consensus of -0.4% and the prior reading of 0.5%. Despite the weak data, the Canadian dollar has managed to post gains today, thanks to a broad US dollar pullback.
The drop in retail sales will put a damper on expectations of a 50-basis point hike at the December meeting, as the Bank of Canada will likely deliver a modest 25-bp hike. Inflation, the bank's number one priority, remains very high at 6.9%, as the BoC's aggressive rate-hike cycle is yet to show results. The benchmark rate is currently at 3.75%, and like the Federal Reserve, there's more life remaining in the current rate-tightening cycle. The BoC is closely monitoring employment and retail sales data, as strong numbers will make it easier for the bank to continue hiking as policy makers look for that elusive peak in inflation.
The recent US inflation report triggered a wave of exuberance, sending equity markets higher and the US dollar on a nasty slide. Investors became more confident that Fed was close to a pivot in its aggressive policy and risk sentiment soared. The Fed has pushed back hard, with Fed members delivering hawkish statements and projections, which has chilled risk appetite and stabilized the US dollar. Fed member Mary Daly weighed in on Monday, stating that inflation remained unacceptably high and projecting that the fed funds rate will peak at 4.75%-5.00%.
USD/CAD tested resistance at 1.3455 earlier in the day. Next, there is resistance at 1.3523
There is support at 1.3341 and 1.3218
EUR/USD eyes ECB rate decisionEUR/USD is in a holding pattern ahead of today's ECB rate meeting. In the European session, the euro is trading at 1.0068, down 0.16%.
The ECB holds its policy meeting later today, amidst difficult economic conditions in the eurozone. Inflation jumped to 9.9% in September, up sharply from 9.1%. The manufacturing and services sectors are in decline and confidence levels are low. The markets have priced in a 0.75% hike and there has even been talk of a jumbo full-point increase. Could the ECB surprise with a lower-than-expected hike of 0.50%? Earlier this week, the Bank of Canada (BoC) and Reserve Bank of Australia (RBA) both delivered smaller hikes than expected, at 0.50% and 0.25%, respectively. The message from both central banks is that they are close to ending their rate-tightening cycles and expect inflation to peak in the next several months.
Will the ECB follow suit? It's possible but unlikely. The ECB only entered the tightening game in July, and the current benchmark of 1.25% remains out-of-sync with inflation, which is close to double-digits and the ECB needs to be aggressive if it hopes to beat inflation. The benchmark rates are much higher in Canada (3.75%) and Australia (2.60%) and have slowed economic growth, while the ECB's low benchmark rate has not had the same effect. Still, the weak eurozone economy could tip into recession as a result of sharp rate hikes, which means that a 0.50% hike cannot be completely discounted. We can expect some movement from EUR/USD in response to the ECB decision - an increase of 0.75% or 1.00% will be bullish for the currency, while a 0.50% hike would disappoint investors and likely send the euro lower.
There is resistance at 1.0095 and 1.0154
0.9924 and 0.9814 are the next support levels
USD/CAD Outlook (26 October 2022)The USDCAD retraces from the recent high to trade at the 1.3660 support level. This move lower is driven by the weakness of the DXY and also respects the downward trendline.
Tomorrow, the Bank of Canada is due to release its decision with regards to the interest rates. Markets are expecting an increase of 75bps to take the interest rate to a high of 4.00%
The last interest rate hike on the 7th of September saw the USDCAD fall briefly. This is a likely scenario again, with the price likely to fall toward the 1.35 support level.
CADJPYHello traders,
As it comes to CADJPY, I see that after the positive CAD news on Friday, this pair has been sold hard.
I see a break of Trend line and support zone and I can see a Friday closure at retest price action. Perhaps the pair might go up for a bit, but this will indicate nice short opportunities to the previous support zones.
Note: The Bank of Japan perfoms an intervention to mitigate the YEN's depreciation. So, Yen may buy from now on invalidating last year's falling performance.
Good luck!
Strength To Strength DXY: Loonie Set To Depreciate Further With another crucial resistance broken at 1.37200, the Loonie seems to be on a gradual path to depreciation against the greenback. With FED aggressively raising rates to tame inflation, we can expect the DXY to get stronger and stronger near-term. No different analysis applies to USDCAD, as the Loonie is likely set to depreciate both technically and fundamentally against the USD.
Looking at the technical picture, the crucial resistance at 1.37200 was breached as the weekly candle closed above it convincingly. With this having taken place, the next resistance that is upcoming is present at 1.40500. For complete information on the levels, have a look at the main chart for in-depth observation.
Trade Safe & Cautiously. Cheers
SELL USDCADShort USDCAD a 1.3120 ,sl at 1.3175 tp at 1.2909
CAD Interest rates at 3.25% as announced yesterday I expect price to go lower.
USD/CAD eyes 130, retail sales nextThe Canadian dollar is lower for a third straight day. In the European session, USD/CAD is trading at 1.2984, up 0.29% on the day.
The US dollar has rebounded this week against the majors, including the Canadian dollar. USD/CAD is on the verge of breaking above the 1.30 line, which has held firm since July 18th. A weak Canadian retail sales report later today could send the Canadian dollar into 130-territory. Retail sales for July is expected to slow to 0.3% MoM, down sharply from the 2.2% gain in June. Core retail sales is projected to drop to 0.9% MoM, down from 1.9%.
Canadian consumers have been hit hard by the cost-of-living crisis, and a natural response has been to cut down on spending. This could prove a major headache for the economy, as domestic demand is a key driver of growth. Canada's inflation has been heading toward double-digits, but as in the US, inflation dropped in July. Canada's CPI slowed to 7.6% YoY, down from 8.1% in June, which marked a 40-year high. However, CPI common, a core CPI indicator, rose to 5.5% YoY in July, up from 5.3% in June. This is the Bank of Canada's preferred gauge and means that the BoC, like the Fed, is not planning any U-turns in policy. We'll have to wait for additional data to determine if headline inflation has peaked or whether the July release was a one-time blip. Even if inflation is easing, it is expected to fall very slowly, which means that consumers will feel the economic pain for some time to come.
The BoC meets again next month, and the markets are expecting a 50 basis point increase, with a 25% of a 75bp hike. In July, the central bank surprised the markets with a super-size 100bp increase, the first G-7 country to deliver such a large rate hike in the post-Covid era.
There is resistance at 1.3040 and 1.3131
USD/CAD has support at 1.2909 and 1.2818
NZD/CAD: Bullish Reversal runningNZD/CAD: Bullish Reversal running
> breakout of bearish trendchannel
> Higher-high-higher-low sequence established
> weekly high broken to the upside
> 200er MA in H4 protecting downside
> next downward trendline fard away
> POC volume below current levels
The setup can potentially pull back a little before advancing. As we are Wall Street Swing Traders, our Stop Losses are far (see SL zone) to give our trades room to breath.
This way, we are achieving an unusually high success rate. I have included the past entries with the WSI H/L Wall Street system in the chart, as usual.
Feel free to reach out with any questions or comments.
Meikel & Your Team WSI
PS :
Join our stream tomorrow! The link will follow shortly in the comments.... See you there!
Yen tumbles to 139The Japanese yen has been pummeled today by the US dollar. USD/JPY is currently trading at 139.22, up 1.29% on the day.
The US dollar is showing broad strength today, and for the yen that has meant a new 20-year low, as USD/JPY touched 139.39 earlier in the day. The symbolic 140.00 line is within striking distance, and it would certainly be memorable if the yen breaks 140 right after the euro broke below the parity line for the first time since 2000.
There has been a parade of central banks announcing higher rates in the past day, notably the Bank of Canada, which surprised the markets with a massive 100bp increase, and the Bank of Korea, which raised rates by 50bp. This has put the Bank of Japan's loose policy further out of sync with the global trend of tightening, and this appears to be weighing on the yen.
On Monday, the yen slid around 1%, triggering a response from Japan's Finance Minister Suzuki, who expressed his concern about the exchange rate at a meeting with US Treasury Secretary Yellen. We have seen this jawboning from Suzuki before, but the likelihood of the Ministry of Finance (MOF) intervening in the currency markets to prop up the ailing yen are remote. We have seen the yen cross the 120 and 130 lines without incident, and there is nothing magical about the 140 level either.
I would note that there are mixed signals emanating from the MOF and the Bank of Japan, which lead me to believe that no intervention is being planned. Governor Kuroda reiterated on Monday that the central bank would take additional monetary easing steps as necessary in order to boost the fragile economy. Kuroda has said on occasion that a weak yen has its advantages, and it seems unlikely that a 140 yen will trigger any change in policy from the BoJ. There are no guarantees, of course, but I would submit that the MoF and BoJ have bigger worries than a weak Japanese yen.
USD/JPY has support at 135.82 and 135.06
There is resistance at the round number of 140.00, followed by 142.14
USOIL Possibility for more upsidesHey traders, in today's trading session we are monitoring USOIL for a buying opportunity around 96 zone, once we will receive any bullish confirmation the trade will be executed.
Trade safe, Joe.
