Fundamental Forecast for CAD: Neutral
USDCAD Analysis and Talking Points:
- Short Term CAD Direction Dependent on NAFTA Outcome
- Bank of Canada Governor Poloz to Emphasis Gradual Tightening
See our Q3 CAD forecast to study what is going to drive the CAD by way of the quarter.
Short Term CAD Direction Dependent on NAFTA Outcome
Headline danger for the Canadian Dollar stays at elevated ranges as Canada seems to succeed in a NAFTA settlement in precept with the US. As such, the near-term route for the Loonie could be very a lot dependent on the end result from the newest NAFTA talks, with an settlement more likely to assist the Canadian Dollar, which might probably see USDCAD retest the latest lows at 1.29. The pattern for USDCAD stays bearish offered the pair holds beneath 1.30 with 1.2850 eyed as the subsequent vital goal. Failure for Canada and the US to succeed in an settlement may see the pair breach the highest of the bearish channel round 1.3110 to make a run in on 1.32.
Bank of Canada Rate Decision
Market pricing for a fee hike at subsequent week’s Bank of Canada fee resolution are comparatively low at 20%, which means that the BoC will maintain off for now (most definitely state of affairs of October fee hike). Alongside this, with Q2 GDP printed roughly in keeping with the BoC’s forecast at 2.9% (BoC exp. 2.8%) and Poloz highlighting on the Jackson Hole Symposium that the enhance in inflation has been resulting from transitory elements, additional means that the Governor will probably emphasise a gradual strategy to elevating charges.
Canadian Employment Report
Another key danger occasion on the financial schedule for the Loonie would be the newest jobs report on the backend of the week. As a reminder, the prior employment report had proven a strong jobs acquire of 54okay, nevertheless, the parts had been barely softer with the contribution coming from half time jobs. Consequently, given the danger occasions this week, USDCAD 1-week implied volatility are at lofty ranges of round 120pip breakeven.
USDCAD PRICE CHART: DAILY TIMEFRAME (January-August 2018)
USDCAD Technical Levels
Resistance 1: 1.3115 (23.6% Fibonacci Retracement)
Resistance 2: 1.3180-1.32 (Resistance Area)
Support 1: 1.2940-50 (Support Area)
Support 2: 1.2900 (Weekly low)
Support 3: 1.2875 (200DMA)
CAD TRADING RESOURCES:
— Written by Justin McQueen, Market Analyst
To contact Justin, electronic mail him at [email protected]
Follow Justin on Twitter @JMcQueenFX
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