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
Bearish
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
Bearish
GBP/USD
Bullish
USD/JPY
Mixed
More View more
Real Time News
  • The $VIX can't continue to trace out this coasting pattern for long. Again, I don't usually throw technical analysis on indicators derived from underlying activity, but VIX has become a trading vehicle in its own right https://t.co/qBvMeOCmmW
  • Commodities Update: As of 19:00, these are your best and worst performers based on the London trading schedule: Silver: 0.31% Oil - US Crude: -0.08% Gold: -0.32% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/DpPoyNP5hl
  • After a strong breakout this summer, Gold prices have now spent almost six months digesting. Get your $XAUUSD market update from @JStanleyFX here:https://t.co/H7k5kv4N5i https://t.co/shvReKpe1U
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 100.00%, while traders in Germany 30 are at opposite extremes with 70.32%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/ivQLPokYOs
  • The US Dollar is now trading lower again. After hitting an intraday low around 90.15, the $DXY rebounded to 90.25 but has turned toward again, falling back below 90.20. $USD https://t.co/xyglMBmakL
  • Indices Update: As of 19:00, these are your best and worst performers based on the London trading schedule: France 40: 0.14% Wall Street: 0.06% US 500: 0.03% Germany 30: 0.02% FTSE 100: -0.00% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/SbFlX1iTdj
  • #Gold is consolidating slightly higher this week, around $1,850, after the precious metal's failed attempt at breaking above the $1,870 level last week. $XAU $GLD https://t.co/MyeWiBSQZR
  • US 10yr yields have notably tightened, falling from 1.10% yesterday to trade around 1.04% today. Yields still remain elevated in 2021 compared to earlier in the pandemic. $GOVT $IEF $USD https://t.co/uT27KDUkhM
  • Hey traders! Get your Tuesday market update from @DailyFX Chief Strategist @JohnKicklighter 👇 https://t.co/WPk9aapKhs
  • $EURGBP is currently trading around 0.8855, nearing the lows set around 0.8840 last week. A break below this level would mark the pair's lowest level since May. $EUR $GBP https://t.co/QinuctvrVK
USD/CAD Extends Rebound Following Bullish Outside Day Price Formation

USD/CAD Extends Rebound Following Bullish Outside Day Price Formation

David Song, Strategist

Canadian Dollar Talking Points

USD/CAD extends the rebound from the monthly low (1.3099) after carving a bullish outside day (engulfing) candle formation earlier this week, and the exchange rate may continue to appreciate over the coming days as the Relative Strength Index (RSI) breaks out of a downward trend.

Advertisement

USD/CAD Extends Rebound Following Bullish Outside Day Price Formation

USD/CAD appears to be on track to test the monthly high (1.3341) as the US Dollar appreciates on the back of waning risk appetite, and the Greenback may continue to reflect an inverse relationship with investor confidence as the Federal Open Market Committee (FOMC) relies on its emergency tools to support the US economy.

It seems as though the Federal Reserve will retain the current path for monetary policy as San Francisco Fed President Mary Daly, who votes on the FOMC in 2021, insists that “policy is in a good place right now,” with the official going onto say that “the Fed is fully committed to using every tool in its tool kit” while speaking at an event hosted by the Wall Street Journal.

At the same time, Richmond Fed President Thomas Barkin, who also votes on the FOMC in 2021, states that “the Fed will aim to keep rates low until we see moderate overshoots of inflation” while speaking at the Economic Club of New York, and the comments suggest the Fed will continue to endorse a dovish forward guidance as the central bank plans to “achieve inflation that averages 2 percent over time.

However, the FOMC appears to be in no rush to deploy more unconventional tools as Cleveland Fed President Loretta Mester, a 2020 voting-member on the FOMC, states that the committee could “shift to longer-term Treasuries, as we did during the Great Recession,” and the wait-and-see approach may keep key market trends in place as the central bank prepares a “more explicit outcome-based forward guidance.”

In turn, the US Dollar may continue to reflect an inverse relationship with investor confidence ahead of the next FOMC interest rate decision on November 5, and the crowding behavior in USD/CAD also looks poised to persist over the remainder of the month as traders have been net-long the pair since mid-May.

Image of IG Client Sentiment for USD/CAD rate

The IG Client Sentiment report shows 67.67% of traders are currently net-long USD/CAD, with the ratio of traders long to short standing at 2.09 to 1. The number of traders net-long is 34.37% lower than yesterday and 13.54% lower from last week, while the number of traders net-short is 6.34% higher than yesterday and 8.21% lower from last week.

The decline in net-short position could be a function of stop-loss orders getting triggered as USD/CAD extends the rebound from the monthly low (1.3099), while the drop in net-long interest has helped to alleviate the tilt in retail sentiment as 75.93% of traders were net-long the pair earlier this week.

Nevertheless, the crowding behavior in USD/CAD looks poised to persist even though the FOMC vows to “increase its holdings of Treasury securities and agency MBS (mortgage-backed securities) at least at the current pace, and current market trends may carry into the end of the month as the US Dollar reflects an inverse relationship with investor confidence.

With that said, swings in risk appetite may sway USD/CAD, but the exchange rate may attempt to test the monthly high (1.3341) as the Relative Strength Index (RSI) breaks out of a downward trend.

How to Use IG Client Sentiment in Your Trading
How to Use IG Client Sentiment in Your Trading
Recommended by David Song
Learn More About the IG Client Sentiment Report
Get My Guide

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.
  • USD/CAD managed to track the June range throughout July as the RSI broke out of a downward trend, but the failed attempt to push back above the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region led to a break of the March/June low (1.3315) even though the momentum indicator failed to push into oversold territory.
  • The decline from the August high (1.3451) briefly pushed the RSI below 30, but lacked the momentum to produce a test of the January low (1.2957) as the indicator failed to reflect the extreme reading in June.
  • In turn, the advance from the September low (1.2994) pushed USD/CAD above the 50-Day SMA (1.3210) for the first time since May, but the exchange rate appears to have reversed coursed following the failed attempt to test the August high (1.3451), which largely lines up with the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region.
  • Looking ahead, USD/CAD may trade within a more defined range as the decline from earlier this month failed to produce a close below the 1.3110 (50% expansion) region, and the exchange rate may attempt to test the October high (1.3341) as it extends the series of higher highs and lows from earlier this week.
  • At the same time, he Relative Strength Index (RSI) suggests the bearish momentum will continue to abate as the indicator breaks out of a downward trend, but need a close above the 1.3250 (23.6% expansion) to bring the Fibonacci overlap around 1.3290 (61.8% expansion) to 1.3320 (78.6% retracement) on the radar.
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