CAD Rate Forecast: USDCAD on Way Back to 1.30, Eyes on GDP

CAD Rate Forecast: USDCAD on Way Back to 1.30, Eyes on GDP

Fundamental Forecast for CAD: Bullish

USDCAD Analysis and Talking Points:

  • Bullish CAD as Canadian Data Outperforms US
  • Bond Spreads Tighten in Favour of CAD
  • Eyes on Canadian Jobs Report

See a Q3 CAD forecast to learn what will expostulate a CAD by a quarter.

Last week, we were bullish on a Canadian Dollar and supposing USDCAD stays subsequent 1.30 we see no reason to change this view. The Loonie has continued to suffer another flurry of clever information points this weeks. Firstly, a many new GDP information rose above mercantile forecasts, display a fastest expansion emanate in a year, led by oil prices, while Friday’s trade necessity saw a poignant narrowing, hence ancillary a box for another rate travel by a finish of this year. Interestingly, new information has outperformed relations to a US, as shown by a Citi Surprise Index, in that a US index has dipped into negative, relations to Canada that switched to positive, advocating a box for serve USDCAD weakness.

US/Canadian Data Outperformance Index

CAD Rate Forecast: USDCAD on Way Back to 1.30, Eyes on GDP

Interest Rate Differentials Continue to Tighten

Rate travel expectations from a Bank of Canada has continued to organisation with around 17bps value of tightening labelled in so distant for a process assembly in October, while a 25bps rate travel is entirely labelled in by December. As such, US-CA 2yr produce bond spreads have continued to pierce in foster of CAD and has breached by a psychological 60bps mark, that has continued to keep USDCAD on a backfoot.

Focus Going Forward for CAD

As we demeanour to subsequent week’s mercantile calendar, a outspoken indicate for Canada will be a jobs news during a backend of a week, while eyes will also be on headlines per NAFTA that continues to benefaction a biggest risk to a Canadian economy.

Next week’s Economic Calendar

CAD Rate Forecast: USDCAD on Way Back to 1.30, Eyes on GDP

Source: DailyFX

USDCAD PRICE CHART: DAILY TIMEFRAME (December 2017-August 2018)

CAD Rate Forecast: USDCAD on Way Back to 1.30, Eyes on GDP

Chart by IG

USDCAD Technical Levels

Resistance 1: 1.3000 (Psychological Level)

Resistance 2: 1.3115 (23.6 Fibonacci Retracement)

Resistance 3: 1.3180-1.32 (Resistance Area)

Support 1: 1.2980 (100DMA)

Support 2: 1.2940-50 (Support Area)

CAD TRADING RESOURCES:

— Written by Justin McQueen, Market Analyst

To hit Justin, email him during Justin.mcqueen@ig.com

Follow Justin on Twitter @JMcQueenFX

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