USD/CAD Holding Pattern during Risk as Oil Rally Gathers Pace

Talking Points:

USD/CAD Holding Pattern during Risk as Oil Rally Gathers Pace.

USD/JPY Remains Capped Despite Dovish BoJ; Fed Rhetoric in Focus.

DailyFX

USD/CAD Daily

USD/CAD Daily Chart

Chart – Created Using Trading View

  • Despite a U.S. holiday, USD/CAD might continue to give behind a allege from Sep as it comes adult opposite trendline support, with a Relative Strength Index (RSI) highlighting a identical dynamic; mangle of a bullish formations might open adult a broader operation from a summer months.
  • Canadian dollar appears to be responding to rising oil prices amid headlines a Organization of a Petroleum Exporting Countries (OPEC) as good as Non-OPEC producers are formulation to boost their efforts in rebalancing a appetite market; might see a pivotal energetic continue to expostulate USD/CAD cost movement forward of a subsequent Bank of Canada (BoC) seductiveness rate preference on Oct 19 as Governor Stephen Poloz argues ‘total CPI acceleration is subsequent a 2 per cent target, especially given of a proxy effects of reduce consumer appetite prices.’
  • Break of trendline support might coax a pierce behind towards a monthly low (1.3068), with a break/close subsequent a Fibonacci overlie around 1.2980 (61.8% retracement) to 1.3040 (50% expansion) opening adult a subsequent downside aim around 1.2770 (38.2% expansion).

USD/JPY Daily

USD/JPY Daily Chart

Chart – Created Using Trading View

  • USD/JPY might face range-bound prices forward of a slew of Fed tongue report for a days forward as it stays mostly capped by 104.20 (61.8% retracement), though a bullish arrangement carried over from a finish of a prior month might continue to take figure as a Federal Open Market Committee (FOMC) creates a some-more common proceed to ready U.S. households and businesses for a Dec rate-hike, while a Bank of Japan (BoJ) endorses a dovish opinion for financial policy.
  • For now, a BoJ’s ‘yield bend control’ energetic appears to be carrying a dictated impact as USD/JPY moves divided from a 2016 low (98.79), and a Japanese Yen might face additional headwinds over a residue of a year as Governor Haruhiko Kuroda warns that ‘it might take somewhat some-more months to strech a 2 percent acceleration rate.’
  • Need a break/close above 104.20 (61.8% retracement) to open adult a subsequent topside aim around 105.40 (50% retracement), though disaster to reason above near-term support around 102.70 (38.2% expansion) might display a range-bound cost movement from September.

DailyFX SSI

  • The DailyFX Speculative Sentiment Index (SSI) shows a FX throng stays net-long USD/JPY given Jul 21, with a ratio attack a uninformed 2016 impassioned during a final week of Sep as it climbed to +6.03, while traders have been net-short USD/CAD given Sep 12.
  • USD/JPY SSI now sits during +1.51 as 60% of traders are long, with brief positions 56.2% aloft from a prior week, while open seductiveness stands 12.3% subsequent a monthly average.
  • USD/CAD SSI now sits during -1.56 as 39% of traders are long, with brief positions 15.7% aloft from a prior week, while open seductiveness stands 12.2% subsequent a monthly average.
  • Will demeanour for signs of depletion in USD/JPY as a pointy pullback in a SSI is accompanied by loss open interest.

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— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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