Never miss a story from David Song

Subscribe to receive daily 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.

Canadian Dollar Talking Points

USD/CAD pares the advance from earlier this month even as U.S. President Donald Trump tweets that Canada’s ‘Tariffs and Trade Barriers are far too high,’ and recent price action warns of further losses as the exchange rate snaps the series of higher highs & lows from the previous week.

Image of daily change for major currencies

USD/CAD Risks Larger Correction Ahead of Canada CPI

Image of daily change for usdcad

The ongoing adjustment in U.S. trade policy may impact the broader outlook for USD/CAD as the President Trump warns that the administration ‘will tax cars if we can’t make a deal,’ and mixed data prints coming out of Canada may curb the recent pullback in the exchange rate as it dampens bets for another Bank of Canada (BoC) rate-hike in 2018.

Despite the 54.1K expansion in Canada Employment, the gauge for household earnings unexpectedly narrowed to 3.0% from 3.5% in June, and fresh updates to the Consumer Price Index (CPI) may ultimately produce headwinds for the Canadian dollar as the headline reading for inflation is projected to hold steady at 2.5% per annum in July.

Image of bank of canada calendar

Signs of limited price pressure may encourage the BoC to keep the benchmark interest rate on hold at the next meeting on September 5 as ‘the Bank estimates that underlying wage growth is running at about 2.3 per cent, slower than would be expected in a labour market with no slack,’ and Governor Stephen Poloz & Co. may stick to the sidelines throughout the remainder of the year as ‘the possibility of more trade protectionism is the most important threat to global prospects.

As a result, narrowing bets for an imminent BoC rate-hike may keep USD/CAD afloat over the coming months especially as the Federal Reserve looks to deliver four rate-hikes in 2018, but the recent shift in dollar-loonie behavior may continue to materialize over the coming days as the Relative Strength Index (RSI) appears to be on its way to threaten the bullish formation from earlier this month. Interested in having a broader discussion on current market themes? Sign up and join DailyFX Currency Analyst David Song LIVE for an opportunity to discuss potential trade setups!

USD/CAD Daily Chart

Image of usdcad daily chart
  • USD/CAD may continue to track the downward trending channel from late-June as the RSI highlights a similar dynamic, with the exchange rate at risk of carving a fresh series of lower highs & lows as the momentum indicator appears to be on the cusp of flashing a bearish trigger.
  • Failure to hold above the 1.3130 (61.8% retracement) region raises the risk for a move back towards the 1.2980 (61.8% retracement) to 1.3030 (50% expansion) area, which largely lines up with the monthly-low (1.2962).
  • Next region of interest coming in around 1.2830 (38.2% retracement) followed by the Fibonacci overlap around 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion), which largely lines up with the May-low (1.2729).
Image of DailyFX economic calendar

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.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.