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.

Free Trading Guides
EUR/USD
Bullish
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
Gold
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
Bitcoin
Bearish
More View more
Real Time News
  • The spread of #coronavirus promises a global economic hit at a time when the global economy is perhaps especially ill-equipped to deal with one. Growth-correlated assets are vulnerable. Get your market update from @DavidCottleFX here: https://t.co/0If0Jw7c2P https://t.co/mph6z70XeF
  • The $JPY continues to struggle against the US Dollar but there seems little appetite to push USD/JPY much beyond a range which has tended to reassert itself since late last year. Get your market update from @DavidCottleFX here: https://t.co/iaVfPSuXy4 https://t.co/1QPhJmYlQv
  • The #Euro may bounce after hitting the lowest level in close to three years against the US Dollar. While the broader trend points firmly lower, selling pressure may be ebbing. Get your market update from @IlyaSpivak here: https://t.co/697SQ9j5FY https://t.co/6SEvwQyod8
  • GBP/CAD has broken below the September uptrend while EUR/CAD may be ending its consecutive 12 day decline with EUR/CHF approaching key resistance as NZD/CAD aims at November lows. Get your currencies update from @ZabelinDimitri here: https://t.co/GpRB7IKhTA https://t.co/hlHlGdhkHc
  • The $GBP recoiled from chart resistance against the US Dollar, setting the stage for prices to resume a bearish trend reversal triggered mid-January. Get your market update from @IlyaSpivak here:https://t.co/lVpyZkIfJt https://t.co/9oXusxs0Kg
  • The #Euro may have more room to fall versus its major peers such as the US Dollar, Japanese Yen and British Pound. What is the technical picture of EUR/USD, EUR/JPY and EUR/GBP? Get your market update from @ddubrovskyFX here: https://t.co/M6fLA9g3BK https://t.co/HMwQgr1WP5
  • The $USD’s aggressive rise versus ASEAN currencies such as the Singapore Dollar, Indonesian Rupiah, Malaysian Ringgit and Philippine Peso prolonged. What is the technical road ahead? Find out from @ddubrovskyFX here:https://t.co/RsFptNzODf https://t.co/u8meQUSsVG
  • $AUD broke critical range support against its US counterpart, suggesting deeper losses are ahead even after prices hit an 11-year low. Get your market update from @IlyaSpivak here:https://t.co/45YpJRjDYj https://t.co/zWAzaL78Sc
  • After negotiating a series of economic and geopolitical risks in 2019, the S&P 500 rounded out the year more than 30% higher. Will the stock market crash in 2020? Find out from @PeterHanksFX here: https://t.co/8KsjB9YkBB https://t.co/4ph9bdMxz9
  • Italy reports first death from coronavirus - BBG
USD/CAD Rate Depreciation Brings 2019 Low in Focus

USD/CAD Rate Depreciation Brings 2019 Low in Focus

2019-10-22 05:00:00
David Song, Currency Strategist
Share:

Canadian Dollar Talking Points

The federal election in Canada has done little to curb the recent decline in USD/CAD, and the advance from the 2019-low (1.3016) may continue to unravel as the exchange rate extends the series of lower highs and lows from the previous week.

USD/CAD Rate Depreciation Brings 2019 Low in Focus

USD/CAD takes out the September-low (1.3134) even though Canada’s Consumer Price Index (CPI) holds steady at 1.9% for the second consecutive month, with the exchange rate likely to exhibit a more bearish behavior as the data print does little to alter the monetary policy outlook.

Image of Bank of Canada interest rate decision

The stickiness in the headline reading for inflation is likely to keep the Bank of Canada (BoC) on the sidelines as price growth sits just below the 2% target. In turn, Governor Stephen Poloz and Co. may stick to the same script at the next meeting on October 30 as “Canada’s economy is operating close to potential and inflation is on target.

The BoC’s wait-and-see approach for monetary policy may continue to heighten the appeal of the Canadian Dollar and drag on USD/CAD as its US counterpart is expected to deliver another rate cut later this month.

Image of Fed Fund futures

In fact, Fed Fund futures now reflect a greater than 90% probability for another 25bp reduction on October 30, and the central bank may continue to reverse the four rate-hikes from 2018 in order to insulate the US economy from the shift in trade policy.

It remains to be seen how the Federal Open Market Committee (FOMC) will respond to ‘phase one’ of the US-China trade deal amid the dissenting views within the central bank, but Chairman Jerome Powell and Co. appear to be on track to implement lower borrowing costs as officials see the benchmark interest rate around 1.50% to 1.75% going into 2020.

With that said, the diverging paths for monetary policy fosters a bearish outlook for USD/CAD, with the exchange rate at risk of giving back the advance from the 2019-low (1.3016) as it extends the series of lower highs and lows from the previous week.

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 USD/CAD daily chart

Source: Trading View

  • Keep in mind, the broader outlook for USD/CAD is no longer constructive as it clears the February-low (1.3068), with the break of trendline support fostering a bearish outlook for the exchange rate.
  • Moreover, the rebound from the 2019-low (1.3016) has failed to generate a test of the Fibonacci overlap around 1.3410 (38.2% expansion) to 1.3420 (78.6% retracement), with recent price action bringing the downside targets back on the radar as USD/CAD takes out the September-low (1.3134).
  • At the same time, the Relative Strength Index (RSI) offers bearish signal as the oscillator snaps the bullish formation from July and approaches oversold territory.
  • The break/close below the 1.3120 (61.8% retracement) to 1.3130 (61.8% retracement) opens up the 1.3030 (50% expansion) region, with the next area of interest coming in around 1.2970 (78.6% retracement) to 1.2980 (61.8% retracement).
  • Will keep a close eye on the RSI as a break below 30 would suggest the bearish momentum is gathering pace.

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

News & Analysis at your fingertips.