- USD/CAD has rallied to the best levels since July as the dollar picks up the trade war saga bid while oil drops from the skies, plunging below the 61.8% fibo retracement support level and tests the Feb 2017 highs.
- USD/CAD is currently trading at 1.3255 and has scored a high of 1.3272 from a low of 1.3155.
USD/CAD has been resuming the 2018 uptrend in recent weeks, reversing the summer lull from 2018 1.3387 highs that took the pair down to test 1.2782 in September. However, the pick up in Fed sentiment in October, despite a more hawkish outcome of the BoC of late, kicked off a correction which has now extended into a reversal due to a rout in the price of oil.
There has been an oversupply situation in the oil market which is now set to grow as consumer demand falls further due to diminishing global growth forecasts. The oil markets have defined as at least a 20% pullback from their recent four-year high in early October. The Canadian economy relies heavily on income and the BoC will be monitoring the effects on inflation which is being picked up by traders and hence the bid in USD/CAD - (Fed/BoC diversion bid).
Sino-US trade spat. should favour the dollar
One of the major concerns on investor's minds is the Sino-US trade spat. Analysts at Rabobank noted that the APEC meetings over the weekend brought a strong indication that it is too early to assume that the end of their trade dispute.
"The downside risks to growth from trade wars are likely to keep risky assets under pressure and this is likely to ensure some support for the USD."
USD/CAD levels
The pair has reached R3 up at the highs having broken through the key 61.8% fibo which held on the initial tests, as to be expected. Analysts at Scotiabank argued that the short-term technicals are neutral—bullish: "The ascending channel from early October has a floor just below 1.3150 and a ceiling in the mid-1.33s." A break of that ceiling exposes the target of 1.3400 and 76.4% fibo of the summer's downtrend to recent lows. RSI has room to go still.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Week ahead – US GDP and BoJ decision on top of next week’s agenda
US GDP, core PCE and PMIs the next tests for the Dollar. Investors await BoJ for guidance about next rate hike. EU and UK PMIs, as well as Australian CPIs also on tap.