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.

Free Trading Guides
EUR/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
GBP/USD
Mixed
USD/JPY
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
Gold
Bullish
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
Bitcoin
Bullish
More View more
Real Time News
  • Forex Update: As of 05:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.01% 🇨🇦CAD: -0.00% 🇦🇺AUD: -0.01% 🇬🇧GBP: -0.04% 🇪🇺EUR: -0.06% 🇨🇭CHF: -0.09% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/vYOXemz2Vo
  • Indices Update: As of 05:00, these are your best and worst performers based on the London trading schedule: France 40: 0.91% Germany 30: 0.90% Wall Street: 0.14% US 500: 0.13% View the performance of all markets via https://www.dailyfx.com/forex-rates#indices https://t.co/FwJ0kGFDLx
  • #GBP, #NZD and #NOK are expected to be the most-active majors versus #USD with one-week implied volatility at 8.72, 6.68 and 6.57 respectively [delayed] -BBG
  • The #Euro is grinding through support guiding the four-month upswing against the US Dollar, hinting that resumption of the broader downtrend may be around the corner. Get your market update from @IlyaSpivak here: https://t.co/lHhewnDqCf https://t.co/knIYvGF2cr
  • EUR/USD Technical Analysis: Euro Downtrend May Have Restarted - https://www.dailyfx.com/forex/technical/home/analysis/eur-usd/2020/01/24/EURUSD-Technical-Analysis-Euro-Downtrend-May-Have-Restarted.html?CHID=9&QPID=917708&utm_source=Twitter&utm_medium=Spivak&utm_campaign=twr #EURUSD #technicalanalysis https://t.co/AbwUdLh4mt
  • The Japanese Yen has faded into 2020 as market risk appetite has held up and hit demand for haven assets. $USDJPY now challenges a key medium-term downtrend, but hasn’t topped it yet.Get your market update from @DavidCottleFX here:https://t.co/4X6vgCgkB7 https://t.co/tkgAOlDdtU
  • Commodities Update: As of 03:00, these are your best and worst performers based on the London trading schedule: Oil - US Crude: 0.06% Gold: -0.10% Silver: -0.10% View the performance of all markets via https://www.dailyfx.com/forex-rates#commodities https://t.co/LwLCxnO6eM
  • Forex Update: As of 03:00, these are your best and worst performers based on the London trading schedule: 🇳🇿NZD: 0.06% 🇯🇵JPY: 0.03% 🇬🇧GBP: -0.00% 🇨🇦CAD: -0.01% 🇪🇺EUR: -0.03% 🇨🇭CHF: -0.06% View the performance of all markets via https://www.dailyfx.com/forex-rates#currencies https://t.co/UT2Vl3reju
  • The US Dollar rose as the Singapore Dollar, Malaysian Ringgit and Philippine Peso fell on #Coronavirus fears. What is the technical outlook for $USDIDR, $USDSGD, $USDMYR and $USDPHP? #ASEAN - https://www.dailyfx.com/forex/technical/article/special_report/2020/01/24/USDIDR-USDSGD-USDMYR-USDPHP-Coronavirus-Impact-on-Trends.html?CHID=9&QPID=917702 https://t.co/hCnmsObRuS
  • IG Client Sentiment Update: Our data shows the vast majority of traders in Ripple are long at 97.22%, while traders in US 500 are at opposite extremes with 76.20%. See the summary chart below and full details and charts on DailyFX: https://www.dailyfx.com/sentiment https://t.co/x0bKaNAhmU
Canadian Dollar Outlook: USD/CAD, EUR/CAD, CAD/JPY, GBP/CAD

Canadian Dollar Outlook: USD/CAD, EUR/CAD, CAD/JPY, GBP/CAD

2019-10-10 20:58:00
Rich Dvorak, Junior Analyst
Share:

CANADIAN DOLLAR PRICE AT RISK AHEAD OF JOBS REPORT, BOC MEETING:

  • The Canadian Dollar could be at risk if Friday’s employment data release disappoints and motivates the Bank of Canada (BOC) to reevaluate its monetary policy outlook
  • Labor market weakness could weigh further on already-sluggish consumption and drag Canadian inflation below the central bank’s target
  • Download our free educational guide on Forex News Trading Strategies

Bank of Canada Deputy Governor Lawrence Schembri noted a day after the September BOC meeting “growth that’s slower can pull inflation below our 2% target,” and added how “this link between inflation and economic growth is at the core of the Bank of Canada’s approach to conducting monetary policy.” Also, the central bank still expects the Canadian economy to slow in the second half of the year considering the US-China trade war, which has already taken its toll on global GDP growth, still lingers as the principal risk to outlook.

CHART OF CANADA’S MONTHLY CHANGE IN EMPLOYMENT & CPI TRIM

Canada Change in Employment and Inflation Historical Chart

Additionally, Schembri mentioned that “a strong job market and rising wages were supporting growth in Canadian household consumption,” but continued how the BOC’s core inflation measures are tracking near its 2% target, which is “consistent with the idea that the economy’s output gap is essentially closed.” Correspondingly, as illustrated in the chart above, the 3-month average change in employment has potential to serve as a precursor to where CPI Trim – the Bank of Canada’s preferred measure of inflation – heads next.

That said, traders will be provided with a fresh look at Canada’s labor market Friday at 12:30 GMT with the release of Canadian employment data for September. Markets are expecting Canada’s net change in employment to cross the wires at 7.9K judging by median economist estimates, which is listed on the DailyFX Economic Calendar along with prior readings for comparison.

CANADIAN DOLLAR IMPLIED VOLATILITY & TRADING RANGES (OVERNIGHT)

Canadian Dollar Price Outlook Implied Volatility Trading Ranges USDCAD, EURCAD, GBPCAD, CADJPY

Alas, an exceptionally poor Canadian jobs report would provide the BOC with material evidence that economic activity is slowing, which increases the potential that slack in Canada’s labor market will spillover to weigh negatively on consumer spending and inflation. In turn, a weak reading on Canada net change in employment or unemployment rate for September could tip the scales that leads to a dovish shift in BOC monetary policy.

The looming uncertainty that surrounds tomorrow’s high-impact economic data release has bolstered Canadian Dollar overnight implied volatility readings. In fact, the latest overnight implied volatility readings for USDCAD, EURCAD, GBPCAD and CADJPY all rest comfortably above their 20-day moving averages. GBPCAD is expected to be the most active major Canadian Dollar currency pair Friday with an overnight implied volatility of 10.6% considering this forex cross faces elevated risk in light of ongoing Brexit developments.

CANADIAN DOLLAR RISK REVERSALS (OVERNIGHT)

Canadian Dollar Risk Reversals Ahead of Canada Jobs Report USDCAD EURCAD GBPCAD CADJPY

Seeing that the Bank of Canada remains one of the last standing hawkish central banks, a pivot by the BOC and Governor Poloz towards a more accommodative stance remains a major downside risk to the Canadian Dollar that may soon materialize – particularly if Friday’s employment change data disappoints. Consequently, Canadian Dollar risk reversals point to the overarching bearish bias among forex options traders ahead of the upcoming Canadian jobs report.

A risk reversal reading above zero indicates that the demand for call option volatility (upside protection) exceeds that of put option volatility (downside protection). The IG Client Sentiment Report, which details client positioning across a variety of currencies and assets, is updated in real-time and also provides insight on the bullish or bearish biases of traders.

USDCAD PRICE CHART: DAILY TIME FRAME (MAY 15, 2019 TO OCTOBER 10, 2019)

USDCAD Price Chart Technical Analysis

Shifting gears to the Canadian Dollar’s technical backdrop, spot USDCAD its currently testing confluent support around the 1.3300 price level, which is underscored by the currency pair’s 50-day simple moving average and mid-point retracement of its trading range since the end of May. If this area of support fails to keep spot USDCAD price action afloat going forward, the 200-DMA will likely be targeted next before the lower bound of the 1-standard deviation options implied trading range and 38.2% Fibonacci retracement level come into focus.

CADJPY PRICE CHART: DAILY TIME FRAME (FEBRUARY 26, 2019 TO OCTOBER 10, 2019)

CADJPY Price Chart Technical Analysis

Turning attention to CADJPY, spot prices remain comfortably wedged between the 80.000-82.000 handles, which will look to serve as respective levels of technical support and resistance. The 38.2% Fibonacci retracement of spot CADJPY’s year-to-date trading range (excluding the JPY flash crash low at the beginning of January) could serve as a more immediate obstacle for bulls whereas bears will need to overcome CADJPY’s 50-DMA. A topside breakout from the triangle chart pattern etched out over the last several months could indicate a major reversal in trend while a breakout to the downside likely opens up the door to retest August’s swing low.

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES

News & Analysis at your fingertips.