Canadian Dollar Talking Points
USD/CAD struggles to keep a miscarry from late final week on a behind of US Dollar weakness, and swings in risk ardour might continue to lean a sell rate brazen of a Federal Open Market Committee (FOMC) Minutes on daub for Nov 25 as a Greenback broadly reflects an different attribute with financier confidence.
USD/CAD Rate Continues to Trade in Defined Range Ahead of FOMC Minutes
USD/CAD continues to trade within a tangible operation following a Group of 20 (G20) Summit as practical assembly offering small information per a financial process outlook, and it stays to be seen if a FOMC Minutes will trigger a marketplace greeting as a executive bank appears to be on lane to keep a stream process during a final assembly for 2020.
The Fed Minutes might mostly strengthen a dovish brazen superintendence as Chairman Jerome Powell and Co. are “committed to regulating a full operation of collection to support a economy,” yet a hazard of a prolonged liberation might pull a executive bank to yield additional financial impulse as Dallas Fed President Robert Kaplan, a 2020-voting member on a FOMC, warns that a mercantile miscarry is “decelerating” during an corner discussion with a Kansas City Fed.
Kaplan goes onto contend that “the final partial of a fourth quarter, and positively a initial quarter, are going to be really challenging” as Fed officials ready to refurbish a Summary of Economic Projections (SEP), and a FOMC might offer a some-more minute brazen superintendence during a subsequent seductiveness rate preference on Dec 16 as Treasury Secretary Steven Mnuchin lays out skeleton to breeze down a puncture lending facilities.
However, a FOMC might rest on a stream collection to support a US economy as Chairman Powell and Co. vouch to “increase a land of Treasury bonds and group mortgage-backed bonds during slightest during a stream pace,” and a US Dollar might continue to simulate an different attribute with financier certainty as pivotal marketplace trends demeanour staid to insist via a residue of year.
At a same time, a lean in sell view might also lift into a finish of 2020 as sell traders have been net-long USD/CAD given mid-May, with a IG Client Sentiment report display 72.26% of traders currently net-long the span as the ratio of traders prolonged to short stands during 2.60 to 1.
The series of traders net-long is 18.45% aloft than yesterday and 13.31% aloft from final week, while a series of traders net-short is 9.34% aloft than yesterday and 28.50% reduce from final week. The decrease in net-short position comes as USD/CAD trades in a tangible range, while a arise in net-long seductiveness has spurred a larger lean in sell view as 70.91% of traders were net-long a span final week.
With that said, key marketplace trends might continue to change USD/CADover a residue of a month as a crowding function looks staid to persist, yet sell rate might continue to trade within a tangible operation brazen of a FOMC Minutes as marketplace appearance is expected to skinny brazen of a Thanksgiving holiday in a US.
USD/CAD Rate Daily Chart
Source: Trading View
- Keep in mind, a USD/CAD improvement from a 2020 high (1.4667) managed to fill a cost opening from March, with a decrease in a sell rate pulling a Relative Strength Index (RSI) into oversold domain for a initial time given a start of a year.
- USD/CAD managed to lane a Jun operation via Jul as a RSI pennyless out of a downward trend, yet a unsuccessful try to pull behind above the 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) segment led to a mangle of a March/June low (1.3315) even yet a movement indicator unsuccessful to pull into oversold territory.
- The decline from a Aug high (1.3451) quickly pushed a RSI subsequent 30, yet lacked a movement to furnish a exam of a January low (1.2957) as a indicator unsuccessful to simulate a impassioned reading in June.
- In turn, a allege from a Sep low (1.2994) pushed USD/CAD above a 50-Day SMA (1.3195) for a initial time given May, yet a sell rate topsy-turvy coursed following a unsuccessful try to exam a August high (1.3451), that mostly lines adult with a 1.3440 (23.6% expansion) to 1.3460 (61.8% retracement) region.
- A identical unfolding took figure in Oct as USD/CAD tracked a Sep range, yet a sell rate privileged a Jan low (1.2957) following a US choosing to trade to a uninformed 2020 low (1.2928).
- However, a unsuccessful try to tighten subsequent a 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement) has pushed USD/CAD adult opposite a 1.3170 (38.2% expansion), with a sell rate trade a tangible operation going into a finish of Nov as it continues to rebound behind from a Fibonacci overlie around 1.3030 (50% expansion) to 1.3040 (61.8% expansion).
- Need a break/close subsequent a Fibonacci overlie around 1.3030 (50% expansion) to 1.3040 (61.8% expansion) to move a 1.2950 (78.6% expansion) to 1.2980 (61.8% retracement) segment behind on a radar, with a subsequent area of seductiveness entrance in around 1.2830 (38.2% retracement).
— Written by David Song, Currency Strategist
Follow me on Twitter during @DavidJSong