CAD Running Out of Steam, Bears May Prevail

CAD Running Out of Steam, Bears May Prevail

Talking Points:

  • USD/CAD nears a vicious draft point.
  • Further seductiveness rate hikes are approaching as a Canadian housing marketplace continues to boom.
  • Retail sales defect though acceleration is approaching to parasite higher.

Fundamental Forecast for NZD: Neutral

We sojourn neutral on a Canadian dollar for a time being though might demeanour to brief a Loonie opposite a USD if a marketplace keeps using forward of any approaching seductiveness rate hikes. With marketplace expectations of another 0.25% rate boost in Oct to 1% already baked in, traders will demeanour to subsequent week’s GDP information as a subsequent motorist of any move.

Inflation ticked aloft in July, to 1.2% from 1% in June, and a Bank of Canada Governor Stephen Poloz recently remarkable that a stream acceleration undershoot is due to proxy factors and that acceleration will pierce behind towards a executive bank’s 2% target.

A demeanour during a charts shows a triple-bottom during a 1.24130 turn in late July, after USD/CAD fell from a May 5 high imitation of 1.37950. A mangle of this low could see a span eye a May 2015 low of 1.19220, while on a upside a opening non-stop on Jul 12, between 1.27690 and 1.28588, is a initial target. The stochastic indicator is also heavily in oversold domain and points to a intensity USD/CAD upside move.

Chart: USD/CAD Price: Daily Timeframe (February – Aug 25, 2017).

CAD Running Out of Steam, Bears May Prevail

Chart by IG

Retail merchant information shows 70.5% of traders are net-long with a ratio of traders prolonged to brief during 2.39 to 1. In fact, traders have remained net-long given Jun 07 when USDCAD traded nearby 1.3446; cost has changed 7.0% reduce given then. We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests USDCAD prices might continue to fall. Traders are serve net-long than yesterday and final week, and a multiple of stream view and new changes gives us a stronger USDCAD-bearish contrarian trade bias.

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— Written by Nick Cawley, Analyst

To hit Nick, email him during nicholas.cawley@ig.com

Follow Nick on Twitter @nickcawley1

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