Canadian Dollar Rallies for Third Day, British Pound Continues to Underperform

The Canadian dollar is the best performing currency against the greenback on Wednesday, with the exchange rate slipping to a fresh weekly low of 1.0433, and the exchange rate may continue to trend lower throughout the week as the loonie continues to benefit from the rise in commodity prices. The USD/CAD is nearly 40pips lower from the open after moving only 46% of its daily ATR, and the currency pair may continue to retrace the advance from the previous month on the back of U.S. dollar weakness. However, as the 30-mionute RSI hovers above oversold territory, we could see the pair consolidate over the week and may push higher over the next few days to fill-in the gap from the 100-SMA at 1.0528. At the same time, the 10-Day moving average crossed below the 50-Day SMA at 1.0654 and looks poised to break the 20-Day at 1.0577, which continues to support a bearish outlook for the dollar-loonie.

The British pound weakened against the U.S. dollar for the second day and remains the worst performing currency on Wednesday as the exchange rate slipped to a low of 1.6620 following the Bank of England quarterly inflation report. The GBP/USD is currently down 100pips for the open after moving 91% of its average true range, and the pair may continue to trend lower throughout the North American trade as investors scale back long-term expectations for higher interest rates in the U.K. However, as the 30-minute RSI approaches oversold territory, we could see the pound-dollar hold steady throughout the session as U.S. traders are off-line in observance of Veterans Day. Nevertheless, the lack of economic event risk in the U.K. may keep the GBP/USD range-bound throughout the remainder of the week as the pair finds intraday support ahead of the previous day’s low  at 1.6601.

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To discuss this report contact David Song, Currency Analyst: dsong@fxcm.com