Never miss a story from David Song

Subscribe to recieve updates on publications
Please enter valid First Name
Please fill out this field.
Please enter valid Last Name
Please fill out this field.
Please enter valid email
Please fill out this field.
Please select a country

I’d like to receive information from DailyFX and IG about trading opportunities and their products and services via email.

Please fill out this field.

Your Forecast Is Headed to Your Inbox

But don't just read our analysis - put it to the rest. Your forecast comes with a free demo account from our provider, IG, so you can try out trading with zero risk.

Your demo is preloaded with £10,000 virtual funds, which you can use to trade over 10,000 live global markets.

We'll email you login details shortly.

Learn More about Your Demo

You are subscribed to David Song

You can manage your subscriptions by following the link in the footer of each email you will receive

An error occurred submitting your form.
Please try again later.

Please add a description for the image.

Fundamental Forecast for Canadian Dollar: Bearish

USD/CAD extends the advance from the monthly-low (1.2782) even as the Bank of Canada (BoC) delivers a hawkish rate-hike, and recent price action keeps the topside targets on the radar as the exchange rate threatens the bearish trend from earlier this year.

USD/CAD Rate Threatens Bearish Trend Ahead of U.S. NFP Report

It seems as though the BoC will pick up the pace to normalize monetary policy as the ‘Governing Council agrees that the policy interest rate will need to rise to a neutral stance to achieve the inflation target,’ and Governor Stephen Poloz & Co. may continue to prepare Canadian households and businesses for higher borrowing-costs as ‘the Canadian economy continues to operate close to its potential and the composition of growth is more balanced.

However, the BoC may endorse a wait-and-see approach going into 2019 as officials pledge to ‘pay close attention to global trade policy developments and their implications for the inflation outlook,’ and little evidence for an imminent rate-hike may continue to prop up USD/CAD especially as the Federal Open Market Committee (FOMC) appears to be on course to deliver another 25bp in December.

Attention now turns to the U.S. Non-Farm Payrolls (NFP) report as employment is projected to increase 190K in October, while Average Hourly Earnings are expected to climb to 3.1% from 2.8% per annum in September, and a batch of positive developments may heighten the appeal of the U.S. dollar as a growing number of Federal Reserve officials show a greater willingness to extend the hiking-cycle.

USD/CAD Rate Threatens Bearish Trend Ahead of U.S. NFP Report

It seems as though the ongoing shift in U.S. trade policy will push Chairman Jerome Powell & Co. to implement above-neutral interest rates as ‘input prices had been bolstered by strong demand or import tariffs,’ and central bank officials may adjust the dot-plot to reflect a steeper trajectory for the federal funds rate as ‘several participants reported that firms in their Districts that were facing higher input prices because of tariffs perceived that they had an increased ability to raise the prices of their products.

In turn, topside targets remain on the radar for USD/CAD as it appears to be threatening the downward trend carried over from June, with the exchange rate at risk of extending the fresh series of higher highs & lows as the Relative Strength Index (RSI) highlights a similar dynamic. Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss key themes & potential trade setups.

USD/CAD Daily Chart

USD/CAD Rate Threatens Bearish Trend Ahead of U.S. NFP Report

Recent price action keeps the topside targets on the radar for USD/CAD, with the exchange rate at risk of extending the advance from the October-low (1.2782) as both price and the RSI threaten the bearish formations from earlier this year. As a result, a close above the 1.3130 (61.8% retracement) hurdle may spark a run at the September-high (1.3226), with the next region of interest coming in around 1.3290 (61.8% expansion) to 1.3310 (50% retracement).

Additional Trading Resources

Are you looking to improve your trading approach? Review the ‘Traits of a Successful Trader’ series on how to effectively use leverage along with other best practices that any trader can follow.

Want to know what other currency pairs the DailyFX team is watching? Download and review the Top Trading Opportunities for 2018.

Other Weekly Fundamental Forecast:

Japanese Yen Forecast - Yen Price May Rise, Look Past BoJ, Eye Vulnerable Stock Markets

Australian Dollar Forecast – Australian Dollar Might Get Some Respite If Inflation Holds Up

Oil Forecast – Crude Oil Set For Third Weekly Decline Chasing Stock Markets Lower