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. See our updated Privacy Policy here.

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
GBP/USD
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
More View more
Real Time News
  • The USD could still rally a bit from here, but has resistance not far ahead that it will need to overcome if it is to extend to a larger degree. Get your weekly $USD technical forecast from @PaulRobinsonFX here: https://t.co/n0CVWWOJDe https://t.co/0uLjsQ2gwM
  • When it comes to buying and selling forex, traders have unique styles and approaches. Learn about buying and selling forex here: https://t.co/D8DXSAdpqC https://t.co/nfiFAlyYXv
  • Slippage can be a common occurrence in forex trading but is often misunderstood. Understanding how forex slippage occurs can enable a trader to minimize negative slippage, while potentially maximizing positive slippage. Learn about FX slippage here: https://t.co/Blrl0unrdT https://t.co/mIsVJ4zTbB
  • What is your forex trading style? Take the quiz and find out: https://t.co/YY3ePTpzSI https://t.co/hymrumanUY
  • Greed is a natural human emotion that affects individuals to varying degrees. Unfortunately, when viewed in the context of trading, greed has proven to be a hindrance more often than it has assisted traders. Learn how to control greed in trading here: https://t.co/kODPAfs2Iz https://t.co/6dAqxsVfxJ
  • The results of this weekend’s German Federal Election will likely dominate Euro sentiment at the start of the week ahead but after a possible EUR/USD bounce they will have little long-term impact. Get your weekly $EUR forecast from @MartinSEssex here: https://t.co/Xu3ZT7EtrW https://t.co/5VHKn52MaA
  • The Consumer Price Index, better known by the acronym CPI, is an important economic indicator released on a regular basis by major economies to give a timely glimpse into current growth and inflation levels. Learn how to better understand CPI here: https://t.co/nAa0fHq4Np https://t.co/mf9rsmIvaW
  • A currency carry trade involves borrowing a low-yielding currency in order to buy a higher yielding currency in an attempt to profit from the interest rate differential. Find out if the carry trade suits your trading style here: https://t.co/7t4BzmLg8w https://t.co/mYWO0Eta0P
  • Sterling continues to contract into trend extremes and the focus is on a pending breakout in the weeks ahead. Get your weekly $GBP technical forecast from @MBForex here: https://t.co/ZvEMQuFjSs https://t.co/rMmq9cehnY
  • Japanese candlesticks are a popular charting technique used by many traders, and the shooting star candle is no exception. Learn about the shooting star candlestick and how to trade it here: https://t.co/mfwJ0sZLTs https://t.co/tm4k3IVzHr
USD/CAD Reverses Ahead of 200-Day SMA as Canada GDP Contracts

USD/CAD Reverses Ahead of 200-Day SMA as Canada GDP Contracts

David Song, Strategist

Canadian Dollar Talking Points

USD/CAD bounces back from a fresh weekly low (1.2569) as Canada unexpectedly contracts in the second quarter of 2021, and the exchange rate may continue to retrace the decline following the Kansas City Fed Economic Symposium as the US Non-Farm Payrolls (NFP) report is anticipated to show a further improvement in the labor market.

Advertisement

USD/CAD Reverses Ahead of 200-Day SMA as Canada GDP Contracts

USD/CAD appears to have reversed course ahead of the 200-Day SMA (1.2539) as Canada’s Gross Domestic Product (GDP) report shows a 1.1% decline in the growth rate versus forecasts for a 2.5% rise, and the exchange rate may trade to fresh yearly highs throughout the remainder of the year as an inverse head-and-shoulders formation takes shape.

The break above the January high (1.2881) may continue to reflect a change in the broader trend as the Bank of Canada (BoC) insists that “the recovery continues to require extraordinary monetary policy support,” and it seems as though Governor Tiff Macklem and Co. will retain the current policy at its next interest rate decision on September 8 as the central bank pledges to “provide the appropriate degree of monetary policy stimulus to support the recovery and achieve the inflation objective.

Image of DailyFX Economic Calendar for US

Until then, the update to the US NFP report may influence USD/CAD as the economy is expected to add 750K jobs in August, and the progress towards ‘full-employment’ may generate a bullish reaction in the US Dollar as it puts pressure on the Federal Open Market Committee (FOMC) to deploy an exit strategy sooner rather than later.

At the same time, a dismal development may drag on USD/CAD as it encourages the FOMC to retain the current policy at its next quarterly meeting in September, but a further decline in the exchange rate may fuel the recent flip in retail sentiment like the behavior seen earlier this year.

Image of IG Client Sentiment for USD/CAD rate

The IG Client Sentiment report shows 74.00% of traders arenet-long USD/CAD following the pullback from the monthly high (1.2949), with the ratio of traders long to short standing at 2.85 to 1.

The number of traders net-long is13.45% higher from last week, while the number of traders net-short is 28.29% lower from last week. The rise in net-long interest has fuel flip in retail sentiment as 42.07% of traders were net-long USD/CAD last week, while the decline in net-short position comes as the exchange rate appears to be reversing course ahead of the 200-Day SMA (1.2539).

With that said, the pullback from the monthly high (1.2949) may end up being short lived as a key reversal pattern materializes, and the exchange rate may stage further attempts to test the December 2020 high (1.3009) as there appears to be a change in the broader trend.

USD/CAD Rate Daily Chart

Image of USD/CAD rate daily chart

Source: Trading View

  • The break above the January high (1.2881) reflects a shift in the broader trend as an inverse head-and-shoulders formation takes shape, with the 50-Day SMA (1.2529) developing a positive slope as USD/CAD trades to fresh yearly highs in August.
  • In turn, the pullback from the monthly high (1.2949) may end up being short lived as USD/CAD appears to be reversing course ahead of the 200-Day SMA (1.2539), with a move back above the Fibonacci overlap around 1.2620 (50% retracement) to 1.2650 (78.6% expansion) bringing the 1.2770 (38.2% expansion) region on the radar.
  • Next area of interest comes in around 1.2830 (38.2% retracement) to 1.2880 (61.8% expansion), with a move above the December 2020 high (1.3009) opening up the 1.3030 (50% expansion) to 1.3040 (50% expansion) area.
  • However, lack of momentum to hold above the 200-Day SMA (1.2539) may open up the 1.2510 (78.6% retracement) region, with the next area of interest coming in around 1.2410 (23.6% expansion) to 1.2440 (23.6% expansion).

--- 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