Dollar/CAD gained some ground on the dovish decision by the BOC. Will it continue rising? The BOC has another opportunity to move the markets with a speech by BOC Governor Stephen Poloz. Here are the highlights and an updated technical analysis for USD/CAD.
The Bank of Canada left the interest rate unchanged at 1% as expected but surprised markets by remaining quite cautious on the outlook. It seems like Poloz and his colleagues in Ottawa are not very keen on raising interest rates in the near future. This certainly hurt the loonie in a week which mostly saw positive figures in the trade balance report, housing figures and more. In the US, the greenback enjoyed the significant progress made on tax cuts while dropping a little on the mixed NFP.Updates:
- Dec 15, 11:26: G10FX : 4 Key Themes To Drive FX Performances In 2018 – EUR/USD could rise – Credit Agricole: 2017 is drawing to a close and it’s time to look into 2018. What will be the main drivers of...
- Dec 15, 6:56: EUR/USD: Dec ECB: A Knee-jerk Response To ECB’s Strong New Staff Projections – SEB: ECB President Mario Draghi caused a wobble around the euro in the final meeting for the year. What’s next? Here...
- Dec 14, 6:51: Dollar is down – 3 reasons, 5 updates: The US dollar is sliding across the board. The greenback is grinding lower in an orderly fashion, allowing for traders...
- Dec 13, 19:40: Fed raises rates: leaves 3 hikes in 2018, 2 dissenters – USD slides: The Fed raises rates as expected. They still see strong growth and are happy with the drop in unemployment. However,...
- Dec 13, 7:18: Draghi can try to push the euro lower, but will likely fail: The big news was out already at the October meeting. The ECB will halve the volume of its bond-buys in...
- Dec 12, 11:31: EUR/USD: Beware Of Year-End Liquidity Shrink Could Plunge It To 1.14 – Nordea: EUR/USD is sticking to the well-known ranges and is not going anywhere fast. But what will happen around the end...
- Dec 11, 18:11: Fed decision: a lot depends on the reaction to the inflation data: The Fed is expected to raise rates for the fifth time in the cycle and third time this year. The...
- Dec 11, 17:59: EUR/USD to rally step by step in 2018 – what are the drivers? – SocGen: EUR/USD had a good 2017 so far, rising from the depths of 1.0340 very early in the year and all...
- Dec 11, 7:18: EUR/USD: Balance Of Risks Into Next Week’s ECB – Nomura: The European Central Bank meets this week amid low inflation and we still don’t know how long the QE program...
USD/CAD daily chart with support and resistance lines on it. Click to enlarge:
- NHPI: Thursday, 13:30. The New House Price Index rose by 0.2% in September, despite some jitters in some housing markets, notably Vancouver and Toronto. A rise of the same scale is expected also for October.
- Stephen Poloz talks: Thursday, 17:25. The Governor of the BOC will deliver an interesting speech in Toronto, titled “Three Things Keeping Me Awake at Night”. Will he lay out deep concerns about lower inflation? He may express some worries and the Canadian dollar could be in a “tin-hat mode”. The text of the speech is released some 15 minutes before he talks.
- Manufacturing Sales: Friday, 13:30. This important indicator rose by 0.5% in September. It has a tendency to move the Canadian dollar more than the parallel figure in other countries. This time, an increase of 0.3% is forecast.
: :* All times are GMT
USD/CAD Technical Analysis
Dollar/CAD initially dipped but never went too far. It then took an upswing and reached above 1.2840 (mentioned last week), a bullish sign.
Technical lines from top to bottom:
1.3160 provided support back in June. 1.3020, just above the round level of 1.30, worked as resistance back in July.
1.2920 capped the pair in late October and turned into a double-top in No. It is followed by 1.2840 capped the pair in mid-November and also had a role in the past.
1.2790 was the high in mid-November and serves as resistance. 1.2665 was a was a double-bottom in November and works as strong support.
It is followed by 1.26, a round number that worked as resistance in October. 1.2540 capped the pair in early October when it traded in a narrow range.
1.2435 was a cushion for the pair during the month of October. 1.2335 gave support to the pair in late September.
I remain neutral on USD/CAD
The better than expected data counters the dovishness of the BOC. This trend could continue for a while longer. The Fed is unlikely to rock the boat. All in all, things could remain balanced for yet another week.
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