News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Sources close to the Chinese Government have told Asia Markets a deal that will see China Evergrande (3333 HK) restructured into three seperate entities is currently being finalised by the Chinese Communist Party and could be announced within days.
  • Shadow MPC as hawkish as ever - They have been calling for the BoE to end QE early since June - Often a big difference in what people think a central bank should do and will do https://t.co/RAakSI8gI6
  • Trading bias allows traders to make informative decisions when dealing in the market. This relates to both novice and experienced traders alike. Start learning how you may be able to make more informed decisions here: https://t.co/rz7fqi8ZEe https://t.co/XfrcQXJu0Z
  • IFO lowers German 2021 GDP growth forecast to 2.5% from 3.3% - Raises 2022 forecast to 5.1% from 4.3%
  • 🇿🇦 Inflation Rate YoY (AUG) Actual: 4.9% Expected: 4.8% Previous: 4.6% https://www.dailyfx.com/economic-calendar#2021-09-22
  • 🇹🇼 Unemployment Rate (AUG) Actual: 4.08% Previous: 4.36% https://www.dailyfx.com/economic-calendar#2021-09-22
  • Heads Up:🇹🇼 Unemployment Rate (AUG) due at 08:00 GMT (15min) Previous: 4.36% https://www.dailyfx.com/economic-calendar#2021-09-22
  • Heads Up:🇿🇦 Inflation Rate YoY (AUG) due at 08:00 GMT (15min) Expected: 4.8% Previous: 4.6% https://www.dailyfx.com/economic-calendar#2021-09-22
  • Heads Up:💶 ECB Non-Monetary Policy Meeting due at 08:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-22
  • ECB's Muller - ECB to discuss raising regular QE when PEPP ends $EUR
USD/CAD Rises Towards 2016 High. Dollar Rallies and Crude Oil Falls

USD/CAD Rises Towards 2016 High. Dollar Rallies and Crude Oil Falls

Daniel Dubrovsky, Strategist

US Dollar, Canadian Dollar, USD/CAD, Crude Oil, Coronavirus – Asia Pacific Market Open

Tuesday’s Recap – US Dollar, Canadian Dollar, Crude Oil, Fiscal Stimulus, Coronavirus

The US Dollar was the best-performing major currency on Tuesday as the Canadian Dollar continued its downward trajectory. A combination of high demand for preserving capital and concerns over a USD shortage amid the coronavirus outbreak likely boosted the haven-linked Greenback. This is as crude oil prices crumbled towards the 2016 bottom with global travel grinding to a halt to stem the virus pandemic.

Oil is a key source of revenue in Canada and low prices can amplify concerns over deflation on top of brewing risks of a recession. This arguably places CAD in a tough spot. Still, equities saw a bounce by the end of the North American trading session which oil prices were unable to capitalize on. The Dow Jones and S&P 500 closed 6.0% and 5.2% higher respectively.

Market optimism picked up pace on a combination of aggressive fiscal and monetary stimulus efforts. For the former, U.S. President Donald Trump was seeking $1k in direct payments for citizens. He is hoping that these could arrive in 2 weeks. This is as Treasury Secretary Steven Mnuchin noted that he and the White House were in talks about a stimulus plan that could amount to as much as $1.2 trillion.

Meanwhile the Federal Reserve continued to push measures to help keep credit markets lubricated and boost liquidity. The Fed announced that it will establish a commercial paper facility and a primary dealer credit facility. This is as the country reported coronavirus cases in all 50 states. Worryingly, February’s retail sales report (excluding auto) showed transactions dropping unexpectedly -0.4% m/m unexpectedly. That was the most since December 2018 and more troubled waters could be ahead.

Other key developments over the past 24 hours:

  • Delta Air Lines may be cut to junk by Moody’s
  • Majority Leader Mitch McConnel says the Senate will vote on house virus aid bill
  • European Union leaders agreed to close borders to travel
  • Fed said to review easing bank leverage and accounting rules
  • Daimler suspended most of European production for an initial 2 weeks
  • Coronavirus reported in West Virginia, cases now in all 50 states

Wednesday’s Asia Pacific Trading Session

While Wall Street ended on a positive note, S&P 500 futures are pointing lower heading into Wednesday’s Asia Pacific trading session. A lack of notable economic event risk arguably places the focus on sentiment for foreign exchange markets. If risk aversion prolongs, the US Dollar could continue to see gains. A decline in crude oil would also leave the Canadian Dollar vulnerable. The anti-risk Japanese Yen may gain.

Canadian Dollar Technical Analysis

USD/CAD’s uptrend continues at an aggressive pace with prices climbing towards the 2016 high. “Inner Support” on the daily chart is maintaining the uptrend with “Outer Support” sitting under. Negative RSI divergence does show that upside momentum is fading. If that precedes a turn lower, keep a close eye on the 23.6% Fibonacci extension at 1.3980 followed by the immediate rising trend line. These may put a pause to near-term declines.

USD/CAD Daily Chart

USD/CAD Rises Towards 2016 High. Dollar Rallies and Crude Oil Falls

Chart Created Using TradingView

--- Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES