Canadian Dollar Talking Points
USD/CAD gaps reduce forward of a Federal Reserve seductiveness rate preference on Aug 1, with new cost movement lifting a risk for a serve decrease in a sell rate as a bearish movement appears to be entertainment pace.
USD/CAD Weakness to Persist Ahead of FOMC as Bearish Momentum Picks Up
USD/CAD slips to a uninformed monthly-low (1.2995) even as a Bank of Canada (BoC) delivers a dovish rate-hike in July, and a Federal Open Market Committee (FOMC) assembly might fuel a new change in dollar-loonie function as a executive bank is widely approaching to keep a benchmark seductiveness rate on hold.
The U.S. Gross Domestic Product (GDP) report might inspire Chairman Jerome Powell Co. to buy some-more time as a updates teach a churned opinion for a economy, and a FOMC might alleviate a hawkish tinge as ‘members concluded that a timing and distance of destiny adjustments to a aim operation for a sovereign supports rate would count on their comment of satisfied and approaching mercantile conditions relations to a Committee’s limit practice design and symmetric 2 percent acceleration objective.’
With that said, a FOMC might merely hang to a stream script, with some-more of a same from Fed officials expected to fuel a new debasement in USD/CAD. However, Chairman Powell Co. might continue to ready U.S. households and businesses for aloft borrowing-costs as a executive bank mostly achieves a twin charge for full-employment and cost stability, and a serve composition in a forward-guidance for financial process might trigger a bullish greeting in a greenback as a Fed appears to be on lane to exercise 4 rate-hikes in 2018.
Nevertheless, disaster to keep a ceiling trend from progressing this year brings a downside targets on a radar for USD/CAD, with new developments in a Relative Strength Index (RSI) highlighting a risk for a serve decrease in a sell rate as a movement indicator extends a bearish arrangement carried over from a prior month.
USD/CAD Daily Chart
- The near-term allege in USD/CAD might continue to uncover amid a unsuccessful try to exam a June-high (1.3386), with a break/close next a 1.2980 (61.8% retracement) to 1.3030 (50% expansion) segment opening adult a downside targets.
- Next segment of seductiveness comes in around 1.2830 (38.2% retracement) followed by a Fibonacci overlie around 1.2720 (38.2% retracement) to 1.2770 (38.2% expansion), that mostly lines adult with a May-low (1.2729).
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— Written by David Song, Currency Analyst
Follow me on Twitter during @DavidJSong.