The USD/CAD has been overbought for some time, read here what our guest blogger Matthew Clark has to say about its future moves.
The USD/CAD had a sharp sell-off yesterday afternoon following the release of Canadian GDP data showing good growth numbers. With no numbers out of the US all eyes were focused on this release which saw the Canadian dollar immediately strengthen more than 0.6 %. The Canadian economy grew at a higher pace of 0.3% in December and 2.8% year-on-year.
But on a technical basis this is the move we were anticipating and confirms our bearish trend. Any Canadian weakness following this upcoming Friday's non-farm payrolls release from the US should be used as an opportunity to buy the CAD.
On Tuesday the Reserve Bank of Australia (RBA) announced no change in its interest rate, following last week’s comments from Bank of Canada Governor Poloz reducing expectations of a rate cut later today to below 40%. The CAD continued to weaken until yesterday’s figures, completing the retracement in wave 2 on the short-term charts.
This set us up for the wave 3 of iii lower, which is generally the largest, most impulsive move. Overnight we retraced slightly, setting up great sell levels ahead of the BoC announcement later today.
Canada has suffered more than any other G7 country from the sharp fall in oil prices over the last eight months. Oil is a major export for Canada and the recent plunge in crude prices has weighed on the currency. But with oil trading back sharply from the lows set on Monday it looks like the correction in oil should continue benefiting the Canadian dollar.
Support at 1.2350 may be tough to break but once it does it will advance our view for this bearish case and is in line with our overall outlook for a weaker USD.
Looking at the longer term chart below we can see clearly that the RSI is showing the USD/CAD has been overbought for quite some time. Although on a longer-term outlook we can see we are trading away from the highs. We are from any minimum retracement of 38.2% at 1.1970 and the 61.8% at 1.1453.
We do not expect any change from the BoC later today and expect the CAD to keep on strengthening. So don’t bank on the bank.
The USD/CAD had a sharp sell-off yesterday afternoon following the release of Canadian GDP data showing good growth numbers. With no numbers out of the US all eyes were focused on this release which saw the Canadian dollar immediately strengthen more than 0.6 %. The Canadian economy grew at a higher pace of 0.3% in December and 2.8% year-on-year.
But on a technical basis this is the move we were anticipating and confirms our bearish trend. Any Canadian weakness following this upcoming Friday's non-farm payrolls release from the US should be used as an opportunity to buy the CAD.
On Tuesday the Reserve Bank of Australia (RBA) announced no change in its interest rate, following last week’s comments from Bank of Canada Governor Poloz reducing expectations of a rate cut later today to below 40%. The CAD continued to weaken until yesterday’s figures, completing the retracement in wave 2 on the short-term charts.
This set us up for the wave 3 of iii lower, which is generally the largest, most impulsive move. Overnight we retraced slightly, setting up great sell levels ahead of the BoC announcement later today.
Canada has suffered more than any other G7 country from the sharp fall in oil prices over the last eight months. Oil is a major export for Canada and the recent plunge in crude prices has weighed on the currency. But with oil trading back sharply from the lows set on Monday it looks like the correction in oil should continue benefiting the Canadian dollar.
Support at 1.2350 may be tough to break but once it does it will advance our view for this bearish case and is in line with our overall outlook for a weaker USD.
Looking at the longer term chart below we can see clearly that the RSI is showing the USD/CAD has been overbought for quite some time. Although on a longer-term outlook we can see we are trading away from the highs. We are from any minimum retracement of 38.2% at 1.1970 and the 61.8% at 1.1453.
We do not expect any change from the BoC later today and expect the CAD to keep on strengthening. So don’t bank on the bank.
This article is written by Matthew Clark who is the owner of
Global Forex Pros.
ABOUT THE AUTHOR: Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker. Matthew has been a trader for more than 20 years running FX desks at major banks and retail brokers. He recently started Global Forex Pros as a service for brokers to offer their clients, teaching them to trade in real-time as professional traders learn at banks and institutions, giving the retail trader the confidence to trade and increasing volumes for the broker.
Devexperts Checks Off Type 2 SOC 2 Audit for Enhanced Data Security
Network, Learn, Grow | FMAS:24
Network, Learn, Grow | FMAS:24
Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
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Get ready to mark your calendars for FMAS:24, returning this May! Take a quick glimpse of what awaits at the Sandton Convention Centre in Sandton, South Africa from May 20-22, 2024.
Don't miss out on this 5-second invite packed with energy and urgency!
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
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Here's a sneak peek into the FMAS:24 vibrant atmosphere! Join us at Africa’s premium financial event for a transformative experience that combines the best of finance and technology.
From May 20-22, 2024, the Sandton Convention Centre in Sandton, South Africa, will be the hub for over 3,500 attendees to engage in unparalleled networking opportunities, learn from over 150 industry-leading speakers, and explore innovations from 120+ exhibitors.
Secure your free ticket now 🔗 https://events.financemagnates.com/yQx0l?utm_source=youtube&utm_campaign=fmas-is-back&utm_medium=video&RefId=FMAS24+Video+Ad+%5B1%5D
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Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 | Africa's Premium Financial Event
Looking to expand your network in #Africa? Join 3500+ attendees at FMAS:24, where online trading, fintech, payments, and crypto meet! Connect with industry leaders and innovators for an unmatched networking experience.
20-22 MAY 2024
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Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Join 3500+ Attendees at FMAS:24 - Africa's Premium Financial Event
Looking to expand your network in #Africa?
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Looking to expand your network in #Africa?
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Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Where the Prop Trading Industry Goes from Here | Finance Magnates Podcast
Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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Explore the tumultuous world of prop trading in this Finance Magnates podcast episode, featuring insights from Head of Axi Select, Greg Rubin.
We're discussing the challenges and shifts caused by MetaQuotes' pivotal decisions affecting MT4 and MT5 users, and how Axi Select offers a unique, realistic path to professional trading, steering clear of traditional prop firm pitfalls.
Tune in for expert analysis on the future of trading and innovative funding models.
The Axi Select programme is only available to clients of AxiTrader Limited. CFDs carry a high risk of investment loss. In our dealings with you, we will act as a principal counterparty to all of your positions. This content is not available for AU, NZ, EU and UK residents. For more information, refer to our Terms of Service. Standard trading fees apply.
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