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Loonie

USDCAD 24th MARCH 2022Oil price rally makes positive sentiment for Canadian Dollar, If we look at the COT Reports sentiment: CAD, www.cftc.gov non-commercials began to reduce their short positions by 11,180 contracts, overall long positions were much more by 47,406. this will lead to a strengthening sentiment in the CAD. Technically, we can see an ascending triangle pattern on USDCAD Daily. and a breakout occurred in the support area. this will increase the probability of USDCAD to be bearish in the future. false breakout can happen due to fundamental factors that change every day, the main focus at this time for the USDCAD pair are oil prices, inflation, monetary and fiscal policies.
Short
by DNP-FX
2
USDCAD Likely To HIT 1.25000 As Oil Prices Support The LOONIE!The long term ascending trendline has been violated which is evident to a smaller extent on the main daily chart. Have a look at the image below which show the weekly timeframe perspective of trendline violation: These two perspective strongly favor that indeed the trendline has been violated and now the price looks set to head lower and test 1.25000 psychological support. This is all based on summarized technical terms, on fundamental basis the only supporting hand that could be aided to the Lonnie appreciation against the greenback is the rising commodity prices including OIL. The current market environment seems to be in support for most commodity currencies. So based on this we can expect the CAD to strengthen in the short term. All the entry, target and exit point prices are shown clearly on the main chart. The entry is set at such level so that a 1:1 risk to reward ratio can be achieved! So its best to wait for the price to retrace to ideal entry point so as to even the risk out. Cheers, I hope you find this insight helpful. Please LIKE & FOLLOW for more insights into other major currency pairs.
Short
by FX618Analysis
USD CAD - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that will have implications for the pace of hikes (more and faster). Furthermore, he explained that there is ‘quite a bit of room’ to raise rates without damaging employment, which suggests upside risks to the rate path. A big question going into the meeting was how concerned the Fed was about recent equity market volatility . But the Chair explained that markets and financial conditions are reflecting policy changes in advance and that in aggregate the measures they look at isn’t showing red lights. Thus, any ‘Fed Put’ is much further away and inflation is the Fed’s biggest concern right now. The Chair also didn’t rule out the possibility of a 50bsp hike in March or possibly hiking at every meeting this year, which was hawkish as it means the Fed wants optionality to move more aggressive if they need to. We didn’t get new info on the balance sheet and Powell reiterated that they’re contemplating a start of QT after hiking has begun and they’ll discuss this in coming meetings. Overall, the tone and language were a lot more hawkish than the Dec meeting and more hawkish than consensus was expecting. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slow (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown (and possible stagflation) are good for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightening into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, once the Fed pivots dovish that’ll be a negative for the USD. 3. CFTC Analysis The USD remains a net-long across major participants, but with price action looking stretched and with peak hawkishness for the Fed arguably close with >6 hikes priced, the risk to reward of chasing USD strength is not very attractive right now. Continued stagflation and geopolitical risks it mean that stretched positioning might not be as important as usual. JP Morgan also shared some stats that suggest the USD has a historical tendency to strengthen in the 6 months going into a first hike but then to weaken during the 6 months directly after a first hike. This is an interesting phenomenon which is worth keeping in mind given the USD’s recent performance. CAD FUNDAMENTAL BIAS: NEUTRAL 1. Monetary Policy The BoC did not surprise at their March meeting by hiking rates to 0.50% from 0.25% and continuing the reinvestment phase regarding asset purchases. The bank noted that the Russia/Ukraine war was a new major uncertainty for the economy and that as a result inflation is now expected to be higher in the near-term. They were optimistic about the growth outlook though and reiterated that it expects further interest rate rises will be needed. On the QT side, Gov Macklem noted that around 40% of the bank's bond holdings were due to mature within two years, and suggested that balance sheet could shrink quickly, and also added that they will discuss ending the reinvestment phase and starting QT at the April meeting. The Governor also said he didn’t rule out the potential for 50bsp rate rises as oil is putting upside pressure on oil, noting that oil prices around $110 per barrel could add another percentage point to inflation. With markets implying close to another 5 hikes this year, we remain cautious on the currency as a slowing US and Canadian economy means the bank should struggle to maintain it’s current hawkish path in the weeks and months ahead. 2. Intermarket Analysis Considerations Oil’s massive post-covid recovery has been impressive, driven by various factors such as supply & demand (OPEC’s production cuts), strong global demand recovery, and of course ‘higher for longer’ than expected inflation. The geopolitical crisis the world is facing right now have opened up a big push higher in WTI, trading at levels last seen since 2008 last week. With oil prices at these levels the risk to demand destruction and stagflation is higher than ever and means we remain cautious oil in the med-term. Reason for that view is: Synchronised policy tightening from DM central banks targeting demand, slowing growth and inflation, a consensus that is very long oil (growing calls for $100 WTI), very steep backwardation futures curve which usually sees negative forward returns, heightened implied volatility. However, recent geopolitical risks have been a key focus point for oil and means escalation and de-escalation will be important to watch. 3. Global Risk Outlook As a high-beta currency, the CAD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the CAD. 4. CFTC Analysis We think the recent price action and positioning data has seen the CAD take a very similar path compared to April and Oct 2021 where markets were way too aggressive and optimistic to price in upside for the CAD, only to then see majority of it unwind. However, oil prices remain in focus as a key intermarket driver.
by thunderpips
2
USD CAD - FUNDAMENTAL DRIVERSUSD FUNDAMENTAL BIAS: BULLISH 1. Monetary Policy The Jan FOMC decision was hawkish on multiple fronts. The statement signalled a March hike as expected, but Chair Powell portrayed a very hawkish tone. Even though Powell said they can’t predict the rate path with certainty, he stressed the economy is in much better shape compared to the 2015 cycle and that will have implications for the pace of hikes (more and faster). Furthermore, he explained that there is ‘quite a bit of room’ to raise rates without damaging employment, which suggests upside risks to the rate path. A big question going into the meeting was how concerned the Fed was about recent equity market volatility. But the Chair explained that markets and financial conditions are reflecting policy changes in advance and that in aggregate the measures they look at isn’t showing red lights. Thus, any ‘Fed Put’ is much further away and inflation is the Fed’s biggest concern right now. The Chair also didn’t rule out the possibility of a 50bsp hike in March or possibly hiking at every meeting this year, which was hawkish as it means the Fed wants optionality to move more aggressive if they need to. We didn’t get new info on the balance sheet and Powell reiterated that they’re contemplating a start of QT after hiking has begun and they’ll discuss this in coming meetings. Overall, the tone and language were a lot more hawkish than the Dec meeting and more hawkish than consensus was expecting. 2. Global & Domestic Economy As the reserve currency, the USD’s global usage means it’s usually inversely correlated to the global economy and global trade. The USD usually appreciates when growth & inflation slow (disinflation) and depreciates when growth & inflation accelerates (reflation). Thus, current expectations of a cyclical slowdown (and possible stagflation) are good for the Dollar. Incoming data will be watched in relation to the ‘Fed Put’ as there are many similarities between now and 4Q18, where the Fed were also tightening into a slowdown. If growth data slows and the Fed stays hawkish it’s a positive for the USD, once the Fed pivots dovish that’ll be a negative for the USD. 3. CFTC Analysis The USD remains a net-long across major participants, but with price action looking stretched and with peak hawkishness for the Fed arguably close with >6 hikes priced, the risk to reward of chasing USD strength is not very attractive right now. Continued stagflation and geopolitical risks it mean that stretched positioning might not be as important as usual. JP Morgan also shared some stats that suggest the USD has a historical tendency to strengthen in the 6 months going into a first hike but then to weaken during the 6 months directly after a first hike. This is an interesting phenomenon which is worth keeping in mind given the USD’s recent performance. 4. The Week Ahead The week ahead for the USD will be dominated by ongoing geopolitical tensions as well as the incoming FOMC meeting. On the geopolitical front, escalation and de-escalation will affect safe haven flows which means it will remain an important driver for the USD, especially with rising commodity prices also stoking growing fears of stagflation. On the FOMC side, a 25bsp hike is fully priced, but markets still have a lot to think about as the March meeting will be accompanied by an updated Summary of Economic Projections, where the markets want to see how the dots have changed (previous meeting showed 3 hikes for 2022). STIR markets currently priced in close to 7 hikes, so anything below 5 ought to be seen as dovish. During his recent testimony, Powell said that markets have responded to their guidance with good transmission and have priced in a much higher tightening path, so if their tone and comments alone have done so much heavy lifting there isn’t much reason for them to suddenly ease off on that. It’s true that the Ukraine/Russia war does add uncertainty, but with the US economy and financial sector far less exposed to Russia compared to Europe, the biggest ‘risk’ from the geopolitical situation is higher commodity prices that feeds into higher inflation expectations. Thus, even though the war adds uncertainty (and the Fed is likely going to say that it does) there is very little reason for them to ease off right now, especially with political pressures building going into the mid-terms. But won’t the Fed be concerned with asset markets by coming across even more hawkish? Despite growth concerns, a war in Europe, global sanctions, additional commodity supply shocks and expectations for 6 Fed hikes and QT, if the S&P is down less than 14% with all of that going on it means that any ‘Fed put’ is probably much further away and no need for the bank to change their tone just yet. How far a hawkish Fed can push long-end yields and the USD is up for debate though. CAD FUNDAMENTAL BIAS: NEUTRAL 1. Monetary Policy The BoC did not surprise at their March meeting by hiking rates to 0.50% from 0.25% and continuing the reinvestment phase regarding asset purchases. The bank noted that the Russia/Ukraine war was a new major uncertainty for the economy and that as a result inflation is now expected to be higher in the near-term. They were optimistic about the growth outlook though and reiterated that it expects further interest rate rises will be needed. On the QT side, Gov Macklem noted that around 40% of the bank's bond holdings were due to mature within two years, and suggested that balance sheet could shrink quickly, and also added that they will discuss ending the reinvestment phase and starting QT at the April meeting. The Governor also said he didn’t rule out the potential for 50bsp rate rises as oil is putting upside pressure on oil, noting that oil prices around $110 per barrel could add another percentage point to inflation. With markets implying close to another 5 hikes this year, we remain cautious on the currency as a slowing US and Canadian economy means the bank should struggle to maintain it’s current hawkish path in the weeks and months ahead. 2. Intermarket Analysis Considerations Oil’s massive post-covid recovery has been impressive, driven by various factors such as supply & demand (OPEC’s production cuts), strong global demand recovery, and of course ‘higher for longer’ than expected inflation. The geopolitical crisis the world is facing right now have opened up a big push higher in WTI, trading at levels last seen since 2008 last week. With oil prices at these levels the risk to demand destruction and stagflation is higher than ever and means we remain cautious oil in the med-term. Reason for that view is: Synchronised policy tightening from DM central banks targeting demand, slowing growth and inflation, a consensus that is very long oil (growing calls for $100 WTI), very steep backwardation futures curve which usually sees negative forward returns, heightened implied volatility. However, recent geopolitical risks have been a key focus point for oil and means escalation and de-escalation will be important to watch. 3. Global Risk Outlook As a high-beta currency, the CAD usually benefits from overall positive risk sentiment as well as environments that benefit pro-cyclical assets. Thus, both short-term (immediate) and med-term (underlying) risk sentiment will always be a key consideration for the CAD. 4. CFTC Analysis We think the recent price action and positioning data has seen the CAD take a very similar path compared to April and Oct 2021 where markets were way too aggressive and optimistic to price in upside for the CAD, only to then see majority of it unwind. However, oil prices remain in focus as a key intermarket driver. 5. The Week Ahead Markets might once more be getting too bullish on the CAD at the wrong time. The CAD, which has not really been benefiting from the big rise in energy prices, saw quite a jolt higher on Friday after the recent jobs report. At face value it was a good print, but under the hood it there was some negatives. Firstly, even though the headline printed above max expectations, the bulk of the gains were part-time jobs. Furthermore, if we account for last month’s contraction, full-time employment only grew by 40K. This week the calendar has CPI data, where another surprise upside print is expected by some to see an even more hawkish BoC. However, with over 6 hikes once again embedded and priced in STIR markets, and with WTI prices started to show some signs of a slowdown in bullish momentum, the odds are arguably tilted towards a more dovish as opposed to more hawkish BoC in the months ahead. However, the short-term could see further strength in the case of a beat, but we will use any additional upside in the CAD to look for selling opportunities.
by thunderpips
2
USD/CAD potential bullish action...After monitoring the USD over the past few days we can see a final clear direction for many instruments as they pave the way to show the trends heading into this first quarterly year end. USD/CAD here is look relatively strong overall with 1.3100 being a clear target to the upside over the coming weeks. As it stands on the daily and above the price action is showing strength around the moving averages and there is a strong Fibonacci setup on the monthly with 1.3100 being an extension confluence. We will update this pair next week to see how it has performed.
Long
by FTUKcom
Shooting Star on USDCAD weekly 8 Feb - 5 Mar 2022Alright, apparently USD is losing grounds against CAD. Breaking 1.2689, which it shall probably will, open way to 1.2600 and 1.2500. Huge shooting star (inverted hammer) on weekly timeframe, with marketing stabilizing itself from the sudden spike on oil last week. Chances are, we might actually see Loonie Dollar struggling between 1.2600 and 1.2700 for the upcoming week. Keep in mind the entire picture and levels on the chart, avoid long positions, happy trading and Best of luck.
Short
by Uzi-Trades-Forex
Potential for USD/CAD downside...1.2300 seems to have a lot of confluences pointed towards. Its a heavy 300+ pip movement towards the downside but it could indicated the movements to come on the rest of this week and into next. It would be a good idea to await a little more pressure to the downside with a downtrend to fully form on the lower timeframes such as the 1 hour. Upside scenarios seem limited at this stage, but make sure to keep up with the dxy when trading on this pair.
Short
by FTUKcom
USDCAD Can Be A Great Long OpportunityTraders, USDCAD has been consolidating for weeks but now it has started to show a sign which can push it higher. This can be multi week position sort of opportunity which is just about to start. See the chart for notes and levels. Take one steps at a time. Trade what you see and ignore any hypes. Stay objective. Rules: 1. Never trade too much 2. Never trade without a confirmation 3. Never rely on signals, do your own analysis and research too ✅ If you found this idea useful, hit the like button, subscribe and share it in other trading forums. ✅ Follow me for future ideas, trade set ups and the updates of this analysis ✅ Don't hesitate to share your ideas, comments, opinions and questions. Take care and trade well -Vik ____________________________________________________ 📌 DISCLAIMER The content on this analysis is subject to change at any time without notice, and is provided for the sole purpose of education only. Not a financial advice or signal. Please make your own independent investment decisions. ____________________________________________________
Long
by vikinsa
2
USDCAD H4 - Short SetupUSDCAD H4 Bit of a long-term forecast projection here... However, CAD seems to be gaining in strength due to recent WTI demand. Market correlation right there. We also have DXY at a key resistance price (weekly/daily resistance), from here we can expect rejections like we have already mentioned, especially after seeing the D1 close break. Lots of data coming up this week to start the week, but eyes peeled for something like the above. The perks are, we need the break and retest for confirmation purposes. Without this, we can't take the trade, and thus can't lose money...
Short
by Trade_Simple_FX
USDCAD: Price Loosing Momentum. Consolidation Ahead ?Since MAY 2021, the greenback has been appreciating against the CAD and various other currencies! The FED signaling BOND tapering at a faster rate and 2-3 hikes already priced in for 2022, the USD is resilient as for now. With the price of USDCAD approaching 1.3000 resistance barrier, the RSI has been generating a loose in price momentum evident by the bearish divergence. To trade this opportunity with caution and confirmation, we need the D candle to break the ascending trendline and 1.27600 level (candle must close below 1.27600). The take profit target would be at 1.26400 and the ideal stop loss should be placed above the swing high. A 1:1 risk to reward is needed to trade this opportunity, so the entry should be adjusted based on all these parameters. Cheers, I hope you found this insight helpful.
Short
by FX618Analysis
Excellent CUP & HANDLE Reversal Pattern on LOONIEIts a good pattern that has developed on this pair. To be able to trade this with certain confirmation, we need the daily and 4H candle to close above 1.25000 resistance. After this a LONG trade can be taken to target 1.26500 Monthly R1 pivot. THIS JUST REPRESENTS MY ANALYSIS ON THIS PAIR AND ITS NOT A TRADE SIGNAL. I HAVE MANY PAIRS THAT I MONITOR AND ALL OF MY TRADES ARE ON W, D , 4H TIMEFRAME (SWING TRADES). ITS NOT POSSIBLE TO POST ALL OF MY ANALYSIS HERE, HOWEVER I POST TRADE SIGNALS WHEN THE CRITERIA IS MET ON THE FX PAIRS I MONITOR. FOLLOW & LIKE TO RECEIVE FREE FX SWING TRADE SIGNALS CHEERS.
Long
by FX618Analysis
LOONIE Likely to target 1.24500 region as a consolidation move!Price seem to be supported by S2 MONTHLY PIVOT. A potential break of trendline could lead the price to aim towards descending trendline located at the area near S1 MONTHLY PIVOT. For the criteria to meet, The 4H candle needs to close above the trendline and 4H 50 EMA. After this the RISK TO REWARD needs to be evaluated based on WEEKLY pivots. This move is likely just a consolidation move as the LOONIE looks to retrace slightly to a concrete psychological resistance at 1.25000. Downtrend is still in play as the currency is supported by commodities prices. This is just my analysis and its not a trade signal. shall the the criteria meet I shall post the trade instruction in a new post.
Long
by FX618Analysis