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.

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
EUR/USD
Bullish
Oil - US Crude
Bullish
Wall Street
Mixed
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
Gold
Bullish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
GBP/USD
Bullish
USD/JPY
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • Key levels in forex tend to draw attention to traders in the market. These are psychological prices which tie into the human psyche and way of thinking. Learn about psychological levels here:https://t.co/1oygcFMFNs https://t.co/d9EmTOHyTv
  • Traders tend to overcomplicate things when they’re starting out in the forex market. This fact is unfortunate but undeniably true.Simplify your trading strategy with these four indicators here:https://t.co/A4dqGMPylo https://t.co/xqbUxwWgTZ
  • An economic calendar is a resource that allows traders to learn about important economic information scheduled to be released. Stay up to date on the most important global economic data here: https://t.co/JdvW6HNuqV https://t.co/Gi8LHCT5sB
  • The AB=CD pattern is simple once you know how to spot it and draw the proper Fibonacci retracements. Make your trading strategy as simple as ABCD here: https://t.co/AKmlmaAZBS https://t.co/FFmRYyx4ou
  • There is a great debate about which type of analysis is better for a trader. Is it better to be a fundamental trader or a technical trader? Find out here: https://t.co/aVAzFypAg1 https://t.co/r7aJb4qpqc
  • There’s a strong correlation between interest rates and forex trading. Forex is ruled by many variables, but the interest rate of the currency is the fundamental factor that prevails above them all. Learn how interest rates impact currency markets here: https://t.co/ERyiY47G5H https://t.co/fIGDaDW21V
  • ...even more incredible is net speculative futures positioning in $EURUSD, rounding off from a record net long position...and it hasn't even cleared 1.20... https://t.co/SfyYTMTT1x
  • Net speculative futures positioning in the Dollar (here overlaid with the $DXY) has pushed to extreme levels commensurate to the levels in Oct 2017 and April 2018 https://t.co/JqHGgVUCqc
  • The $SPX closed below the 50-day moving average Friday. The first time it has done so in 103 trading days. The 'technical' end of an exceptional run: https://t.co/HUn5Q6JmlK
  • Despite recent weakness in the #SP500, the growth-linked New Zealand Dollar has been gaining momentum ahead of the #RBNZ next week Could this trend continue, or will $NZDUSD capitulate to the mercy of risk trends? Check out my fundamental outlook - https://www.dailyfx.com/forex/fundamental/forecast/weekly/nzd/2020/09/19/New-Zealand-Dollar-Outlook-NZDUSD-May-Rise-on-RBNZ-Watch-SP-500.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/34vcR4fjpT
Canadian Dollar: Don't Fight The Trend

Canadian Dollar: Don't Fight The Trend

2017-07-22 01:52:00
Martin Essex, MSTA, Analyst
Share:
Canadian Dollar: Don't Fight The Trend

Talking Points:

  • The downward trend in USDCAD remains intact.
  • Data on Friday showed core inflation rising and buoyant retail sales.
  • A further Canadian interest rate rise in October now seems more likely than not.

Fundamental Forecast for CAD: Bullish

Check out our brand new Trading Guides: they’re free and have just been updated for the third quarter of 2017

Ever since the Bank of Canada raised its overnight lending rate by a quarter of a percentagepoint to 0.75% on July 12 it has been tempting to take profits on the Canadian Dollar’s steady appreciation against the US Dollar that has been in place since early May – and that would have been a big mistake.

In little more than two months, USDCAD has fallen from 1.3789 to around 1.2540 currently, and fighting the trend would have been a good way to lose money. At some stage the rally will run out of steam but it’s noteworthy that since that July 12 rate rise, the first in seven years, USDCAD has continued to drop.

That’s principally because the markets were expecting the BoC to tighten monetary policy still further, albeit gradually, even before the latest economic data – and after the figures another rate rise on October 25, when it publishes its next Monetary Policy Report, seems highly probable.

The headline inflation rate fell to 1.0% year/year in June from 1.3% in May – dropping further away from the BoC’s 2% target – but two of Canada’s three measures of core inflation were higher and May retail sales jumped by 0.6% month/month rather than the 0.3% expected by analysts. This helped reinforce the Canadian currency’s bullish momentum and inevitably brought the 1.25 level into focus for USDCAD, even though the pair is now technically oversold.

Chart: USDCAD Daily Timeframe (May 1, 2017 – July 21, 2017)

Canadian Dollar: Don't Fight The Trend

Chart by IG

In the coming week, one more key data release is scheduled: the GDP report for May on Friday. The month/month rise is expected to be little changed from the previous 0.2% but any increase above that would reinforce expectations that Canadian interest rates, and the hence the Canadian Dollar, still have further to climb.

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Follow Martin on Twitter @MartinSEssex

For help to trade profitably, check out the IG Client Sentiment data

And you can learn more by listening to our regular trading webinars; here’s a list of what’s coming up

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

DISCLOSURES