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
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
Oil - US Crude
Bearish
Wall Street
Bearish
Gold
Mixed
GBP/USD
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
USD/JPY
Bearish
More View more
Real Time News
  • Commodities Update: As of 07:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.14% Gold: -0.27% Silver: -0.45% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/5KtqG4d8Ym
  • Forex Update: As of 07:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.15% 🇯🇵JPY: 0.04% 🇪🇺EUR: -0.08% 🇨🇦CAD: -0.09% 🇬🇧GBP: -0.15% 🇦🇺AUD: -0.15% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/tTYWvu60SE
  • Indices Update: As of 07:00, these are your best and worst performers based on the London trading schedule: FTSE 100: -0.25% US 500: -0.35% Wall Street: -0.36% France 40: -0.40% Germany 30: -0.57% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/cyYqs9hGYZ
  • 🇫🇷 Business Confidence (OCT) Actual: 93 Expected: 96 Previous: 96 https://www.dailyfx.com/economic-calendar#2020-10-22
  • Heads Up:🇫🇷 Business Confidence (OCT) due at 06:45 GMT (15min) Expected: 96 Previous: 96 https://www.dailyfx.com/economic-calendar#2020-10-22
  • 🇩🇪 GfK Consumer Confidence (NOV) Actual: -3.1 Expected: -2.8 Previous: -1.7 https://www.dailyfx.com/economic-calendar#2020-10-22
  • What are some trading mistakes @nickcawley1 made during his career and what did he learn from them? Find out:https://t.co/y3cckNW22W https://t.co/DWXPd1Fa8E
  • 🇳🇴 Unemployment Rate (AUG) Actual: 5.3% Expected: 5.1% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2020-10-22
  • 🇩🇪 GfK Consumer Confidence (NOV) Actual: -3.1 Expected: -2.8 Previous: -1.6 https://www.dailyfx.com/economic-calendar#2020-10-22
  • Heads Up:🇳🇴 Unemployment Rate (AUG) due at 06:00 GMT (15min) Expected: 5.1% Previous: 5.2% https://www.dailyfx.com/economic-calendar#2020-10-22
USDCAD Rate Carves Lower Highs and Lows Ahead of Fed Rate Decision

USDCAD Rate Carves Lower Highs and Lows Ahead of Fed Rate Decision

2019-07-31 06:30:00
David Song, Strategist
Share:

Canadian Dollar Talking Points

The near-term rebound in USDCAD appears to have stalled ahead of the Federal Reserve interest rate decision, and the exchange rate may continue to give back the advance from the monthly-low (1.3016) as it initiates a fresh series of lower highs and lows.

USDCAD Rate Carves Lower Highs and Lows Ahead of Fed Rate Decision

USDCAD stands at risk of facing a more bearish fate over the next 24-hours of trade as the Federal Open Market Committee (FOMC) is widely expected to alter the path for monetary policy.

The FOMC appears to be on track to deliver an insurance cut in July as “participants generally agreed that downside risks to the outlook for economic activity had risen materially since their May meeting, particularly those associated with ongoing trade negotiations and slowing economic growth abroad.

Image of Fed Fund futures

It seems as though the FOMC will insulate the US economy from the shift in trade policy, but it remains to be seen if Chairman Jerome Powell and Co. will establish a rate easing cycle as Fed Fund futures still highlight a greater than 60% probability for another reduction at the September 18 interest rate decision.

With that said, the Fed’s forward guidance for monetary policy is likely to influence the near-term outlook for USDCAD, and the exchange rate may exhibit a more bearish behavior over the coming days if the FOMC shows a greater willingness to reverse the four rate hikes from 2018.

In contrast, the Bank of Canada (BoC) may face a different fate as “growth in the second quarter appears to be stronger than predicted,” and Governor Stephen Poloz and Co. looks poised to keep the benchmark interest rate on hold at the next meeting on September 4 as “the degree of accommodation being provided by the current policy interest rate remains appropriate.

In turn, the diverging paths for monetary policy casts a bearish outlook for USDCAD, with the exchange rate at risk of giving back the advance from the monthly-low (1.3016) as it carves a fresh series of lower highs and lows.

Sign up and join DailyFX Currency Strategist David Song LIVE for an opportunity to discuss potential trade setups.

USD/CAD Rate Daily Chart

Image of usdcad daily chart
  • Keep in mind, the broader outlook for USDCAD is no longer constructive as the advance from the April-low (1.3274) stalls ahead of the 2019-high (1.3665), with the break of trendline support raising the risk for a further decline in the exchange rate.
  • Moreover, the break of the February-low (1.3068) suggests there’s a broader shift in USDCAD behavior, with the Relative Strength Index (RSI) highlighting a similar dynamic as the oscillator tracks the bearish formation from earlier this year.
  • In turn, USDCAD stands at risk of extending the fresh series of lower highs and lows as the rebound from the monthly-low (1.3016) sputters ahead of the 1.3220 (50% retracement) region, with a break/close below the 1.3120 (61.8% retracement) to 1.3130 (61.0% retracement) area raising the risk for a move towards 1.3030 (50% expansion).

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 Strategist

Follow me on Twitter at @DavidJSong.

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

DISCLOSURES