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
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
Bullish
USD/JPY
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
More View more
Real Time News
  • The #USD spent the bulk of Q2 in a range after a climactic Q1; and with a series of risk themes continuing to push, combined with an election in November, the door appears open for more vol in USD. Download our USD trading guide here: https://t.co/2Wo7EcwAht https://t.co/BA5dWk4wTt
  • $USD hegemony is at risk thanks to changes in the global economy and the long-term consequences of the US-China trade war. Get your market update from @CVecchioFX here:https://t.co/5GO9UrvO4y https://t.co/OTTEmg76W8
  • The immediate focus is on a break of this multi-week consolidation formation in the Australian Dollar with the broader rally vulnerable while below 7042. Get your AUD technical analysis here: https://t.co/iEYos1ioBc https://t.co/kuzB3Eqps0
  • #Gold prices have rallied to nine-year highs with the breakout testing multi-year uptrend resistance into the open of Q3. Can the rally be sustained? Download our latest Gold trading guide!: https://t.co/3KO2QWOnOt https://t.co/YIIGZdeIAJ
  • Why financial market traders must monitor both monetary and fiscal policy? Find out from @MartinSEssex here:https://t.co/Fkzk88Y5gm https://t.co/zerRXZC1Tq
  • Get your snapshot update of the of relative currency strength and exchange status from around the globe here: https://t.co/DmhBkd4B0k https://t.co/uj93z2SHpH
  • The Australian Dollar’s surge from the March lows may be coming to an end as bearish patterns begin to line up on multiple time-frames. Check out our #AUD trading guide to learn more here: https://t.co/pjfm07tqFd https://t.co/VypHLra1ER
  • The Evening Star candlestick is a three-candle pattern that signals a reversal in the market and is commonly used to trade forex. Learn more about the evening star candlestick pattern here: https://t.co/8OTE7m01IG https://t.co/Vumcng7UB3
  • After a miraculous recovery in Q2, equity markets will be left juggling the Fed’s policy and the threat of a second covid wave, all in an election year. Evidently, traders will have their hands full in Q3. Read our equity forecast here: https://t.co/JARqbOKIeM https://t.co/Ms6zEucjqg
  • Hey traders! I'm sure you've all heard about trend trading. Sharpen your knowledge here: https://t.co/jkliL5sxj7 https://t.co/uvlv1MCAHI
USD/CAD Rebound Unravels as Fed Prepares to Purchase Corporate Bonds

USD/CAD Rebound Unravels as Fed Prepares to Purchase Corporate Bonds

2020-06-16 01:00:00
David Song, Strategist
Share:

Canadian Dollar Talking Points

USD/CAD pulls back from the weekly high (1.3686) as the Federal Reserve updates the Secondary Market Corporate Credit Facility (SMCCF) ahead of the semi-annual testimony with Chairman Jerome Powell, but recent developments in the Relative Strength Index (RSI) warns of a larger correction as the indicator bounces back from oversold territory and offers a textbook buy signal.

USD/CAD Rebound Stalls as Fed Prepares to Purchase Corporate Bonds

USD/CAD struggle to retain the advance following the Federal Open Market Committee (FOMC) interest rate decision as the central bank announces that the Secondary Market Corporate Credit Facility (SMCCF)will purchase corporate bonds to create a corporate bond portfolio that is based on a broad, diversified market index of U.S. corporate bonds.”

More updates are likely to emerge as the Fed expands the scope of the Main Street Lending Programto allow more small and medium-sized businesses to be able to receive support, but it remains to be seen if the FOMC will deploy more non-standard measures over the coming months as the central bank pledges to “evaluate our monetary policy stance and communications as more information about the trajectory of the economy becomes available.

In turn, Chairman Powell may strike a less dovish tone in front of US lawmakers as the update to the Summary of Economic Projections (SEP) show “a general expectation of an economic recovery beginning in the second half of this year,” and the central bank head may emphasize that “when the time comes, after the crisis has passed, we will put these emergency tools back in the toolbox” as the balance sheet climbs above $7.1 trillion in June.

Image of DailyFX economic calendar for Canada

At the same time, the Bank of Canada (BoC) may follow a similar path as the update to Canada’s Consumer Price Index (CPI) is expected to show the headline reading for inflation holding flat in May after contracting 0.2% the month prior, and Governor Tiff Macklem and Co. may adjust the forward guidance at the next meeting on July 15 as “the Bank expects the economy to resume growth in the third quarter.

With that said, the BoC may continue to rule out a negative interest rate policy as “the Bank’s programs to improve market function are having their intended effect,” but recent price action in USD/CAD warns of a larger correction as the exchange rate reverses at the March low (1.3315), while the Relative Strength Index (RSI) bounces back from oversold territory and offers a textbook buy signal.

Forex for Beginners
Forex for Beginners
Recommended by David Song
Forex for Beginners
Get My Guide

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 near-term rally in USD/CAD emerged following the failed attempt to break/close belowthe Fibonacci overlap around 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement), with the yearly opening range highlighting a similar dynamic as the exchange rate failed to test the 2019 low (1.2952) during the first full week of January.
  • The shift in USD/CAD behavior may persist in 2020 as the exchange rate breaks out of the range bound price action from the fourth quarter of 2019 and clears the October high (1.3383).
  • However, the pullback from the yearly high (1.4667) may continue to evolve as USD/CAD takes out the April low (1.3850),and the exchange rate may continue to exhibit a bearish behavior in June as it fills the price gap from March.
  • The Relative Strength Index (RSI) highlights a similar dynamic as the oscillator continues to track the downward trend from May, but the indicator may offer a textbook buy signal over the coming days as it appears to be bouncing back from oversold territory.
  • Nevertheless, the break/close below the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region opens up the Fibonacci overlap around 1.3290 (61.8% expansion) to 1.3320 (78.6% retracement), which largely lines up with the March low (1.3315), with the next area of interest coming in around 1.3250 (23.6% expansion).
  • Nevertheless, lack of momentum to hold below the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region may push USD/CAD back towards the overlap around 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement), with the next area of interest coming in around 1.3510 (38.2% expansion) to 1.3540 (23.6% retracement).
Traits of Successful Traders
Traits of Successful Traders
Recommended by David Song
Traits of Successful Traders
Get My Guide

--- 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.