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
Subscribe
Please try again
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
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
Mixed
More View more
Real Time News
  • The US Dollar is still struggling against most ASEAN currencies. USD/SGD remains downside-focused despite recent gains. USD/THB is eyeing a triangle. USD/IDR and USD/PHP may point lower. Get your market update from @ddubrovskyFX here:https://t.co/6Nvvmz8h6d https://t.co/TYsfOXHrro
  • (Weekly Fundamental) Australian Dollar Outlook: AUD/USD May Rise on Dovish Fed Speak After Huge NFP Miss #AUD $AUDUSD https://www.dailyfx.com/forex/fundamental/forecast/weekly/aud/2021/05/07/Australian-Dollar-Outlook-AUDUSD-May-Rise-on-Dovish-Fed-Speak-After-Huge-NFP-Miss.html?CHID=9&QPID=917702&utm_source=Twitter&utm_medium=Dubrovsky&utm_campaign=twr https://t.co/L9pERwjTqh
  • Bitcoin is struggling to extend April’s bounce while Ethereum and Litecoin are exhibiting signs of momentum exhaustion. What are key technical levels to watch for ahead? Find out from @ddubrovskyFX here:https://t.co/PnZId4xOh2 https://t.co/ZTYoxdBxLl
  • The Indian Rupee has been rising despite a surge in local Covid cases, owing to rising yields amid a temporary flood of US Dollars into the banking system. INR remains at risk, eyeing CPI data. Get your market update from @ddubrovskyFX here:https://t.co/6r7hahVtx4 https://t.co/a0z46Q0Mn4
  • Risk management is one of the most important aspects of successful trading, but is often overlooked. What are some basic principles or risk management? Find out from @PaulRobinsonFX here: https://t.co/IsnpfJhp91 https://t.co/tnF1RME8gJ
  • Top event risk on my radar for the week ahead: Musk on SNL (Sat); run of Fed speak with Brainard, Williams, Bostic (Tues); US CPI and UK GDP (Wed); Mexico central bank rate decision (Thur); US earnings - PLTR, BABA, ABNB, DASH, DIS (Tues-Thur). What are you watching?
  • It starts. This man is living the life. https://t.co/YhD4oMNAFG
  • Forex Update: As of 20:00, these are your best and worst performers based on the London trading schedule: 🇪🇺EUR: 0.82% 🇦🇺AUD: 0.77% 🇨🇭CHF: 0.75% 🇳🇿NZD: 0.62% 🇯🇵JPY: 0.46% 🇨🇦CAD: 0.23% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/j5I6Gut0CR
  • Commodities Update: As of 20:00, these are your best and worst performers based on the London trading schedule: Gold: 0.85% Silver: 0.53% Oil - US Crude: -0.18% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/wZsuyfwuv1
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Silver are long at 88.33%, while traders in Wall Street are at opposite extremes with 77.43%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/IrlL0LEJe3
USD/CAD Under Pressure as BoC Highlights Limits of Monetary Policy

USD/CAD Under Pressure as BoC Highlights Limits of Monetary Policy

David Song, Strategist

Canadian Dollar Talking Points

USD/CAD tags a fresh monthly low (1.3132) as Bank of Canada (BoC) Senior Deputy Governor Carolyn Wilkins highlights the “limits of monetary policy to solving all problems,” and the failed attempt to test the January low (1.2957) in August may prove to be an exhaustion in the bearish behavior rather than a change in trend as key market themes look poised to persist in September.

USD/CAD Under Pressure as BoC Highlights Limits of Monetary Policy

USD/CAD struggles to preserve the range bound price action carried over from the previous week as BoC’s Wilkins emphasizes that “monetary policy is ill-equipped to deal with sector-specific issues,” with the official going onto say “there are many other policies that are well suited to deal with sector-specific issues.

The comments suggests the BoC will rely on its current tools to support the Canadian economy as Wilkins warns that “central banks are likely to run out of conventional firepower if we see an economic downturn in a low-interest-rate world,” and it seems as though Governor Tiff Macklem and Co. are in no rush to alter the path for monetary policy as the central bank pledges to carry out “its large-scale asset purchase program at a pace of at least $5 billion per week.

In turn, the BoC appears to be on track to retain the current policy at the next meeting on September 9 as Deputy Governor Lawrence Schembri insists that “our extraordinary policy actions have been firmly focused on attaining our inflation target, by supporting demand and employment throughout this difficult and protracted economic recovery,” and USD/CAD may continue to give back the advance from the start of the year as key market themes look poised to persist in September.

It remains to be seen if the Federal Reserve Economic Symposium will influence the near-term outlook for USD/CAD as the Federal Open Market Committee (FOMC) mulls an outcome-based approach versus a calendar-based forward guidance for monetary policy, but the event may largely indicate more of the same for the next interest rate decision on September 16 as the central bank extends its lending facilities through the end of the year, while the committee votes unanimously to push back “the expiration of the temporary U.S. Dollar liquidity swap lines through March 31, 2021.”

As a result, current market trends may carry into September as the BoC and FOMCstick to the status quo, and the crowding behavior in the US Dollar also looks poised to persist over the coming days as retail traders have been net-long USD/CAD since mid-May.

Image of IG Client Sentiment report for USD/CAD rate

The IG Client Sentiment report shows 71.93% of traders are still net-long USD/CAD, with the ratio of traders long to short at 2.56 to 1. The number of traders net-long is 17.45% higher than yesterday and 21.32% higher from last week, while the number of traders net-short is 35.05% lower than yesterday and 14.69% lower from last week.

The decline in net-short position could be indicative of profit taking behavior as USD/CAD tags a fresh monthly low (1.3132), while the rise in net-long interest suggests the crowding behavior in the Greenback will carry into September even though the Fed’s balance sheet climbs back above $7 trillion in August.

With that said, the widening Fed’s balance sheet along with the crowding behavior in the US Dollar may keep USD/CAD under pressure, the failed attempt to test the January low (1.2957) in August may prove to be an exhaustion in the bearish behavior rather than a change in trend as key market themes look poised to persist in September.

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 USD/CAD correction from the 2020 high (1.4667) managed to fill the price gap from March, with the decline in the exchange rate pushing the Relative Strength Index (RSI) into oversold territory for the first time since the start of the year.
  • Nevertheless, USD/CAD reversed from the March low (1.3315) in June, with both price and the RSI carving an upward trend during the month, but the bullish formations have been largely negated as the exchange rate snapped the range bound price action during the first half of July.
  • USD/CAD managed to track the June range throughout the previous month as the RSI broke out of the downward trend established in July, but the failed attempt to push back above the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region has spurred a break of the March/June low (1.3315) even though the momentum indicator failed to push into oversold territory.
  • The RSI appears to be deviating with price as it struggles to push into oversold territory, but the failed attempts to break below 30 may indicate a potential exhaustion in the bearish price action rather than a change in trend as the 50-Day SMA (1.3421) continues to track a negative slope.
  • Meanwhile, a ‘death cross’ formation seemed to have taken shape in August as the 50-Day SMA (1.3421) crossed below the 200-Day SMA (1.3529), but the difference in slope undermines the bearish signal as USD/CAD fails to test the January low (1.2957) ahead of September.
  • Lack of momentum to test 1.3110 (50% expansion) may push USD/CAD back above the 1.3170 (50% expansion) region, but the exchange rate may continue to face range bound conditions as it appears to be capped by the 1.3250 (23.6% expansion) area.
  • Need a break/close above 1.3250 (23.6% expansion) to open up the former support-zone around 1.3290 (61.8% expansion) to 1.3320 (78.6% retracement), which lines up with the March/June low (1.3315).
  • At the same time, need a break//close below 1.3110 (50% expansion) to open up the Fibonacci overlap around 1.3030 (50% expansion) to 1.3040 (61.8% expansion), with the next area of interest coming in around 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement), which lines up with the January low (1.2957).

--- 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