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
Mixed
Oil - US Crude
Bearish
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
Bearish
Gold
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
GBP/USD
Bearish
USD/JPY
Mixed
More View more
Real Time News
  • Indices Update: As of 18:00, these are your best and worst performers based on the London trading schedule: FTSE 100: -0.19% Germany 30: -0.20% France 40: -0.25% US 500: -2.42% Wall Street: -2.93% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/2bszQp27Do
  • Commodities Update: NYM WTI Crude 38.38 (-3.69%), ICE Brent Crude 40.29 (-3.54%), NYM NYH Gasoline 111.08 (-2.47%). [delayed
  • Get your Monday market update from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/iUCcev4Dp2
  • US Equity Update: $DJI -3.11% $SPX -2.58% $NDX -2.38% $RUT -2.96% $VIX +18.40% [Delayed]
  • Gold Price Forecast: XAUUSD Coils Ahead of Next Big Break https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2020/10/26/Gold-Price-Forecast-XAUUSD-XAU-Coils-Ahead-of-Next-Big-Break.html $GLD $Gold $XAUUSD https://t.co/Fq0ubuQI4g
  • https://t.co/lf8u7L4OLg
  • $SPX levels discussed earlier today. . . #SPX500 120min. . . https://t.co/WrLinXHFVJ
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 96.88%, while traders in NZD/USD are at opposite extremes with 73.37%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/QRZvS6cwDe
  • Commodities Update: As of 16:00, these are your best and worst performers based on the London trading schedule: Gold: 0.16% Silver: -0.77% Oil - US Crude: -3.05% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/XULtt1P1l4
  • German Chancellor Merkel planning lockdown light to tackle coronavirus pandemic, new measures will be discussed on Wednesday - Bild
USD/CAD Rate Trades Below 1.3000 Ahead of FOMC Minutes

USD/CAD Rate Trades Below 1.3000 Ahead of FOMC Minutes

2020-01-02 01:00:00
David Song, Strategist
Share:

Canadian Dollar Talking Points

USD/CAD trades below the 1.3000 handle for the first time since 2018, and the bearish behavior may persist ahead of the Federal Open Market Committee (FOMC) Minutes as the Relative Strength Index (RSI) dips into oversold territory.

USD/CAD Rate Trades Below 1.3000 Ahead of FOMC Minutes

USD/CAD clears the range-bound price action carried over from the third quarter of 2019, and developments coming out of the US may continue to drag on the exchange rate as the Senate appears to be on track to pass the United States-Mexico-Canada Agreement (USMCA) over the coming days.

The trade agreement may heighten the appeal of the Canadian Dollar as it encourage the Bank of Canada (BoC) to retain the current policy, and Governor Stephen Poloz and Co. may largely endorse a wait-and-see approach at the next meeting on January 22 as “the Bank continues to expect inflation to track close to the 2 percent target over the next two years.

It remains to be seen if the FOMC Minutes will reveal anything new as the update to the Summary of Economic Projections (SEP) shows the benchmark interest rate sitting at 1.50% to 1.75% though 2020, and Chairman Jerome Powell and Co. may adopt a less dovish tone at the next rate decision on January 29 as Fed officials “believe that the current stance of monetary policy will support sustained growth, a strong labor market, and inflation near our symmetric 2 percent objective.”

Image of Federal Reserve interest rate forecast

In turn, the rotation within the FOMC may do little to influence the monetary policy outlook, but market participants may pay increased attention to Philadelphia Fed President Patrick Harker, Dallas Fed President Robert Kaplan, Minneapolis Fed President Neel Kashkari and Cleveland Fed President Loretta Mester as they become a voting member in 2020.

With that said, the yearly opening range for USD/CAD remains in focus as it extends the string of lower highs and lows from the previous week, and the exchange rate may attempt to test the October 2018 low (1.2782) as the Relative Strength Index (RSI) dips into oversold territory.

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 rate daily chart

Source: Trading View

  • Keep in mind, the rebound from the July 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 USD/CAD snapping the range bound price action from the third quarter as the exchange rate slips below the 1.3000 handle.
  • The Relative Strength Index (RSI) highlights a similar dynamic as the oscillator dips into oversold territory for the first time since 2018.
  • Need a break/close below the Fibonacci overlap around 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement) to open up the next downside hurdle around 1.2830 (38.2% retracement), with the next area of interest coming in around 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion).
  • Will keep a close eye on the yearly opening range along with the Fibonacci overlap around 1.3030 (50% expansion) to 1.3040 (61.8% expansion) to see if the former support zone will act as a resistance.

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 2020.

--- 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