Fundamental Forecast for Canadian Dollar: Bullish
Even yet a mercantile calendar stays sincerely light for a week ahead, USD/CAD might continue to vaunt a bearish function as marketplace participants digest a uninformed developments entrance out of a Bank of Canada (BoC).
The dollar-loonie sell rate is fast entrance a 2016-low (1.2461) as Governor Stephen Poloz and Co. broach a initial rate-hike given 2010, and a Canadian dollar might continue to conclude opposite a U.S. reflection as a BoC appears to be on march to exercise aloft borrowing-costs over a entrance months.
With a Canadian economy now projected to grow an annualized 2.8% in 2017, a BoC might blueprint a some-more minute exit plan a as ‘output opening is now projected to tighten around a finish of 2017, progressing than a Bank expected in a April Monetary Policy Report (MPR).’ The element change in executive bank tongue suggests Governor Poloz and Co. might even cruise a array of rate-hikes generally as ‘the factors behind soothing acceleration seem to be mostly temporary.’
At a same time, mixed information entrance out of a U.S. economy accompanied by a discreet tongue from a Humphrey-Hawkins testimony have dragged on interest-rate expectations, with Fed Fund Futures behind to highlighting a 50/50 possibility for a pierce in December. In turn, squeezing expectations for 3 Fed rate-hikes in 2017 might encourage a longer-term bearish opinion for USD/CAD as Chair Janet Yellen records ‘the sovereign supports rate would not have to arise all that most serve to get to a neutral process stance.’
USD/CAD Daily Chart
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USD/CAD stays during risk for serve waste as both cost and a Relative Strength Index (RSI) safety a downward trends from progressing this year. Moreover, a bearish movement appears to be entertainment gait as a RSI pushes deeper into oversold territory, with a dollar-loonie sell rate mostly eyeing a 1.2620 (50% retracement) jump as it clears a Jun 2016-low (1.2654). Next downside jump comes in around 1.2420 (23.6% expansion), that sits only underneath a May 2016-low (1.2461).
Retail merchant information shows 73.3% of traders are net-long USD/CAD with a ratio of traders prolonged to brief during 2.74 to 1. In fact, traders have remained net-long given June 07 when USD/CAD traded nearby 1.3481; cost has changed 6.2% reduce given then. The series of traders net-long is 1.6% aloft than yesterday and 3.4% aloft from final week, while a series of traders net-short is 7.5% reduce than yesterday and 1.4% aloft from final week..
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