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Fundamental
Overview
The losses peaked for the
Canadian Dollar last Monday as the volatility normalised, and we got some good
US data throughout the week. That helped to turn around the risk sentiment and
give the Loonie a boost.
The market has been slowly
paring back the aggressive rate cuts expectations for the Fed as now a 25 bps
cut in September is seen as more likely with a total of 98 bps of easing by
year-end. On the BoC side, the market is fully pricing a 25 bps cut in
September and a total of 73 bps of easing by year-end.
USDCAD
Technical Analysis – Daily Timeframe
USDCAD Daily
On the daily chart, we can
see that USDCAD spiked above the 1.3860 resistance last Monday due to the global stock
market rout but eventually gave back all the gains as the mood in the market
improved.
The sellers piled in at
every break lower and extended the drop into the 1.3720 level. The natural
target should be the strong support zone around the 1.36 handle. The buyers, on
the other hand, will want to see the price breaking above the 1.3785 level again
to regain some control and position for new highs.
USDCAD Technical
Analysis – 4 hour Timeframe
USDCAD 4 hour
On the 4 hour chart, we can
see that the price is consolidating around the 1.3720 level. The sellers will
want to see the price breaking lower to increase the bearish bets into the 1.36
handle. The buyers, on the other hand, will likely keep on stepping in around
the lows with a defined risk below to position for a rally into a new cycle
high.
USDCAD Technical Analysis – 1 hour Timeframe
USDCAD 1 hour
On the 1 hour chart, we can
see that the recent price action formed a descending triangle. The price can
break on either side of the pattern but follows next is generally a more
sustained move in the direction of the breakout. The red lines define the average daily range for today.
Upcoming
Catalysts
Tomorrow we get the US PPI data. On Wednesday, we have the US CPI report. On
Thursday, we get the US Retail Sales and Jobless Claims figures. Finally, on
Friday, we conclude the week with the University of Michigan Consumer Sentiment
survey.