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.

Free Trading Guides
EUR/USD
Mixed
Oil - US Crude
Mixed
Wall Street
Bearish
Gold
Mixed
GBP/USD
Mixed
USD/JPY
Bearish
More View more
Real Time News
  • Negative yielding government bonds – What are they telling us? Find out from @nickcawley1 here: https://t.co/F6JuhmrvPT https://t.co/ZzbHAVT6RE
  • LIVE IN 30 MIN: In this session, Currency Analyst @ZabelinDimitri will analyze the cross-asset impact of geopolitical risks affecting markets in the week ahead. https://www.dailyfx.com/webinars/146770987
  • Join @ZabelinDimitri 's #webinar at 11:30 PM ET/3:30 AM GMT to find out how geopolitical risk will affect the markets in the week ahead. Register here: https://t.co/hsULxMNOtM https://t.co/jdzRaFJnaa
  • Commodities Update: As of 02:00, these are your best and worst performers based on the London trading schedule: Silver: 0.20% Gold: 0.06% Oil - US Crude: -3.63% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/GqKRXlbHQc
  • Forex Update: As of 02:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.42% 🇳🇿NZD: 0.30% 🇪🇺EUR: 0.07% 🇨🇭CHF: -0.04% 🇬🇧GBP: -0.24% 🇯🇵JPY: -0.38% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/6yhR5FFtZw
  • LIVE NOW: Join DailyFX Senior Strategist @IlyaSpivak LIVE as he discusses the outlook for the financial markets in the week ahead! https://www.dailyfx.com/webinars/889679267
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 95.10%, while traders in US 500 are at opposite extremes with 68.84%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/gvtwxfEvLB
  • Japan coronavirus response package: - Increase subsidy rates for firms to stem job losses - Allow 1 year tax payment delay for virus-shaken companies - Cut property tax to zero for smaller firms (BBG) #JPY #coronavirus
  • - Internal political rifts in Eurozone, #OPEC may be biggest Euro & Brent catalysts this week - Revived North-South tension in Eurozone may cause delays as Riyadh and Moscow dig in heels https://www.dailyfx.com/forex/fundamental/article/special_report/2020/04/06/Euro-Crude-Oil-May-Suffer-From-OPEC--Eurozone-Political-Rifts.html #oott
  • Get your stock market basics right - what is the stock market and how does stock trading work? Find out here: https://t.co/JfAJLAtlsY https://t.co/PVAmCCDR8w
Canadian Dollar Looks to Poloz for Further Strength

Canadian Dollar Looks to Poloz for Further Strength

2017-01-14 04:05:00
Tyler Yell, CMT, Currency Strategist
Share:
Canadian Dollar Looks to Poloz for Further Strength

Fundamental Forecast for CAD: Neutral

See the schedule of upcoming webinars and join us LIVE to follow the financial markets!

The Canadian Dollar has been a resilient currency at the start of the year. Much of the strength is due in part to Oil’s consistency above a long-term focal point on the chart as well as the perception that improved inflation expectations in the United States could also send inflation expectations higher in Canada too.

On Wednesday, Bank of Canada governor Stephen Poloz will announce what is anticipated to be no change in rates, but in a low rate environment, much of the focus appropriately turns to the Central Bank outlook. Given the sharp rise in the Yield Curve in everywhere except Japan, there is a focus on whether or not Poloz will be discussing the next action from the Bank of Canada as a hike down the economic road as opposed to a stimulus measure or a cut, which could further push the Canadian Dollar higher.

After Wednesday’s Bank of Canada meeting on Wednesday, we will have CPI in Canada on Friday, which, is anticipated to tick higher given the overall tick higher in commodities and borrowing costs. Two components worth keeping in mind as we come to an arguably important pivot point in the Canadian Dollar is its prior stability against the USD and the relative strength it currently enjoys alongside other commodity currencies.

Over the second half of 2016, USD/CAD moved higher by ~6.5%, which is a lot on an absolute basis, but little compared to other major moves lower against the USD as seen by GBP/USD, EUR/USD, and most notably, USD/JPY. These three pairs saw a move between 10-20% in favor of USD, which helps show on a relative basis that the Canadian Dollar had a hard time weakening thanks in part to rising Oil prices.

CAD currently sits as one of the strongest currencies in G10FX alongside AUD that is working on its third weekly advance and NZD with a ~2.5% weekly appreciation. Given the commodity dollar-bloc strength, it’s fair to think that the momentum could continue, which would likely translate further into both technical and fundamental favor likely leading to further CAD strength. Thursday’s USD/CAD move brought the lowest price since October, and the previously mentioned momentum would favor continuation without a USD/CAD close above Wednesday’s high of 1.3293.

-TY

--- Written by Tyler Yell, CMT, Currency Analyst/ Trading Instructor

To contact Tyler, email him at tyell@dailyfx.com or Tyler.Yell@ig.com

Follow him in the DailyFX Real Time News feed and Twitter at @ForexYell.

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

DISCLOSURES

News & Analysis at your fingertips.