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
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
Wall Street
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
Gold
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
GBP/USD
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
USD/JPY
Bullish
More View more
Real Time News
  • Gold Prices Down, Not Out as China Cheerleads Stock Markets- https://www.dailyfx.com/forex/fundamental/daily_briefing/daily_pieces/commodities/2020/07/06/Gold-Prices-Down-Not-Out-as-China-Cheerleads-Stock-Markets.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #Gold #XAUUSD #China #stocks
  • Understanding the US-Mexico relationship and how the ebb and flow of economic activity in the former impacts the latter is crucial for trading USD/MXN. Get your $USDMXN market update from @ZabelinDimitri and @FxWestwater here:https://t.co/oCRV13zbF0 https://t.co/ZnqRxkYayI
  • 🇳🇱 Consumer Confidence Final (JUN) Actual: -27 Previous: -31 https://www.dailyfx.com/economic-calendar#2020-07-06
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.22%, while traders in US 500 are at opposite extremes with 69.86%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/MNLQfuvr2U
  • Forex Update: As of 04:00, these are your best and worst performers based on the London trading schedule: 🇦🇺AUD: 0.33% 🇪🇺EUR: 0.30% 🇳🇿NZD: 0.26% 🇨🇦CAD: 0.09% 🇬🇧GBP: 0.01% 🇯🇵JPY: -0.18% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/1neF13YBgw
  • Heads Up:🇳🇱 Consumer Confidence Final (JUN) due at 04:30 GMT (15min) Previous: -31 https://www.dailyfx.com/economic-calendar#2020-07-06
  • Indices Update: As of 04:00, these are your best and worst performers based on the London trading schedule: Germany 30: 2.30% France 40: 2.21% Wall Street: 1.75% FTSE 100: 1.54% US 500: 1.44% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/hossI2xmCO
  • A macro forex trading guide exploring the US-Canada relationship and how to trade the Canadian Dollar through the prism of the Core-Perimeter model. Get your market update from @ZabelinDimitri and @PeterHanksFX here:https://t.co/dF51UMcGFC https://t.co/Ba5JxKQFrH
  • RT @DanielGMoss: Risk assets following Chinese equities higher as the #ChinaA50 index breaks to fresh 12-year highs The trade-sensitive $…
  • RT @margaretyjy: The FTSE China A50 Index hit 12-year high at 15,600 points. Mainland China brokerage firms were reported to see new accoun…
USD/CAD Bear-Flag Continues to Unfold as Fed Drops Hawkish Guidance

USD/CAD Bear-Flag Continues to Unfold as Fed Drops Hawkish Guidance

2019-01-31 16:10:00
David Song, Strategist
Share:

Canadian Dollar Talking Points

USD/CAD trades to a freshly monthly-low (1.3119) as the Federal Reserve removes the hawkish forward-guidance for monetary policy, and the exchange rate stands at risk for a larger correction as a bear-flag formation unfolds.

Image of daily change for major currencies

USD/CAD Bear-Flag Continues to Unfold as Fed Drops Hawkish Guidance

Image of daily change for usdcad rates

Fresh remarks from the Federal Open Market Committee (FOMC) suggest the benchmark interest rate will sit at its current range of 2.25% to 2.50% even though U.S. New Home Sales jumps 16.9% in November, and the Fed may start to taper the $50B/month in quantitative tightening (QT) as officials note that ‘the normalization of the size of the portfolio will be completed sooner, and with a larger balance sheet, than in previous estimates.’

The Bank of Canada (BoC) may follow a similar path to its U.S. counterpart amid the weakening outlook for the global economy, and the central bank may larger endorse a wait-and-see approach the next meeting on March 6 as the central bank’s ‘revised forecast reflects a temporary slowing in the fourth quarter of 2018 and the first quarter of 2019.’

Image of BoC interest rate

Governor Stephen Poloz may sound less-hawkish over the coming months as ‘CPI inflation is projected to edge further down and be below 2 per cent through much of 2019,’ but it remains to be seen if the BoC will remove the hawkish forward-guidance as the ‘Governing Council continues to judge that the policy interest rate will need to rise over time.’ With that said, the current environment may foster a larger correction in USD/CAD as the BoC continues to prepare Canadian households and businesses for higher borrowing-costs, and recent price action raises the risk for a further depreciation in the exchange rate as bear-flag formation unfolds.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
  • Keep in mind, broader outlook for USD/CAD remains constructive following the break of the June-high (1.3386), but the failed attempts to close above the 1.3630 (38.2% retracement) to 1.3660 (78.6% expansion) region raises the risk for a larger correction as both price & the RSI snap the bullish formations from October.
  • The recent decline appears to be stalling ahead of the 200-Day SMA (1.3117), but a close below 1.3130 (61.8% retracement) opens up the Fibonacci overlap around 1.2980 (61.8% retracement) to 1.3030 (50% expansion), with the next area of interest coming in around 1.2830 (38.2% 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 2019.

--- Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES

News & Analysis at your fingertips.