Connect with us

Forex

Canadian Dollar Price Forecast: USD/CAD, AUD/CAD, GBP/CAD

Published

on


Canadian Dollar, USD/CAD, AUD/CAD, GBP/CAD Talking Points:

  • The Canadian Dollar has shown a general tendency towards strength over the past week.
  • USD/CAD may be problematic for CAD-bulls given proximity to the 1.3000 psychological level.
  • The analysis contained in article relies on price action and chart formations. To learn more about price action or chart patterns, check out our DailyFX Education section.

The Canadian Dollar continues to show signs of strength, and in the major USD/CAD pair, prices have pushed down to a fresh monthly low, finding a bit of support above the 1.3100 figure. When I had looked into USD/CAD last week, prices had just started to re-engage with the key zone running from 1.3130-1.3150. And while that support was unable to hold the lows, sellers weren’t able to stray very far and, at this point, that zone is currently showing tendencies of acting as short-term resistance.

USD/CAD Eight-Hour Price Chart

USDCAD Eight Hour Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

In a normal backdrop, a recent fresh lower-low combined with potential resistance taken from an area of prior support would normally be construed as bearish. The caveat here, however, is the 1.3000 psychological level, which so far in 2020 has proven to be a tough price to take-out.

This was also the case for much of last year. Sellers continually teased a 1.3000 break but that didn’t actually happen until the last day of 2019. And after coming into the year holding just inside of 1.3000, prices broke-out in early January. There was a re-test in early-September but that test failed and sellers quickly relinquished control: Prices rallied by more than 400 pips over the remainder of the month, and now that we’re almost half-way through October, sellers have taken out approximately 61.8% of that prior bullish move.



of clients are net long.



of clients are net short.

Change in Longs Shorts OI
Daily 7% 0% 5%
Weekly 21% 6% 17%

So the quandary here on the short side may be one of potential as that psychological level is relatively near-by. For those that want to look for themes of CAD-strength, there may simply be more attractive venues elsewhere. And likewise on the side of CAD-weakness, there may simply be more attractive venues away from the US Dollar as the US currency goes through its own themes and drives as we’re now three weeks away from the US Presidential Election.

USD/CAD Weekly Price Chart

USDCAD Weekly Price Chart

Chart prepared by James Stanley; USDCAD on Tradingview

AUD/CAD Interesting for Cases of CAD Strength

For those that do want to investigate long-CAD strategies, AUD/CAD may hold some interest. AUD/CAD is currently sitting on a big support level around the .9400 handle, as this is the 38.2% retracement of the 2008-2012 major move. This same price had held as resistance throughout the month of June, eventually giving way to a bullish advance. But, prices came right back in late-September and after a bounce up to a lower-high, again in mid-October.

Building Confidence in Trading

Building Confidence in Trading

Recommended by James Stanley

Building Confidence in Trading

At this point, that series of lower-highs can be incorporated with this horizontal support to produce a descending triangle formation. Such a formation will often be approached with the aim of bearish breakouts, and given the secondary support level around .9313, there could be an area to look for prices to breakdown to.

To learn more about descending triangles, check out our DailyFX Education section.

AUD/CAD Daily Price Chart

AUDCAD Daily Price Chart

Chart prepared by James Stanley; AUDCAD on Tradingview

GBP/CAD Possibly of Interest for CAD-Weakness Scenarios

For those on the other side of the Canadian Dollar, looking for CAD-weakness scenarios, GBP/CAD may hold some interest. Despite the craziness of 2020 the pair has, by and large, stuck into a range. It hasn’t been a smooth range but there’s little doubt that mean reversion has so far been the name of the game for GBP/CAD in the year of 2020.

What makes this area compelling for CAD-bears is the fact that prices have appeared to give a recent push off of support, making a move towards the resistance side of the range that’s already seen multiple inflections so far this year.

Traits of Successful Traders

Traits of Successful Traders

Recommended by James Stanley

Traits of Successful Traders

On the resistance side, there’s potential around 1.7221, 1.7350, 1.7431 and then at 1.7539. If those can get taken-out, the next obvious level is around the 1.7675 area on the chart. For support – there’s a confluent zone from around 1.6965 up to the 1.7000 psychological level, followed by 1.6823.

To learn more about psychological levels, check out our DailyFX Education section.

GBP/CAD Daily Price Chart

GBPCAD Daily Price Chart

Chart prepared by James Stanley; GBPCAD on Tradingview

— Written by James Stanley, Strategist for DailyFX.com

Contact and follow James on Twitter: @JStanleyFX





Source link

Continue Reading
Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

Forex

Australian Dollar in Focus on China GDP Data

Published

on

By


Australian Dollar, China Q3 GDP, IMF World Economic Outlook, Australia-China Trade Tensions:

  • Upcoming economic data out of China could fuel the Australian Dollar’s push to retest its yearly high.
  • However, deteriorating Australia-China relations threatens to fuel a period of significant risk aversion.

IMF Forecast China to Lead Global Economic Recovery

Fresh data prints coming out of China may sway AUD/USD, as Australia’s largest trading partner is expected to grow 5.5% in the third quarter of 2020.

Should this expansionary print come to pass, it would show that the Chinese economy has recovered all lost ground from its record 6.8% contraction in the first quarter and continues to lead the global economic rebound from the coronavirus-induced doldrums.

In fact, the International Monetary Fund’s (IMF) latest projections indicate that China is the only major nation expected to grow this year, on the back of a surge in export demand and its success in containing the outbreak of the highly infectious coronavirus.

LIVE: Australian Dollar in Focus on China GDP Data

DailyFX Economic Calendar

Moreover, the Chinese government has yet to unleash trillions of yuan in stimulus, after selling a record amount of bonds this year, which suggests that a more extensive recovery could be in the offing.

Beijing has ordered regional governments to sell 3.75 trillion yuan of bonds by the end of October, building on the 2.27 trillion already issued by the end of July and surpassing the total amount of debt issued in 2019.

Therefore, with a substantial fiscal stimulus safety-net in place it appears the world’s second-largest economy is set to continue expanding this year, which may ultimately buoy regional risk appetite and in turn put a premium on the cyclically-sensitive Australian Dollar.

LIVE: Australian Dollar in Focus on China GDP Data

AUD Forecast

AUD Forecast

Recommended by Daniel Moss

Get Your Free AUD Forecast

Australia-China Tensions Limiting AUD

However, escalating tensions with China may hamper the trade-sensitive AUD, after two Australian cotton industry groups released a joint statement stating that “it has become clear to our industry that the National Development Reform Commission in China has recently been discouraging their country’s spinning mills from using Australian cotton”.

These measures are the latest in a tit-for-tat exchange that has seen Australia’s largest trading partner impose 80% tariffs on barley exports, launch an anti-dumping and anti-subsidy probe into the country’s wine, and verbally ban imports of Australian thermal and coking coal.

Given China accounts for 40% of Australia’s exports, a marked deterioration in relations would have devastating consequences for the local economy and could possibly lead to $80 billion worth of iron ore exports falling into the Asian powerhouse’s crosshairs.

To that end, the development of this pivotal relationship should be intently watched by market participants, with a notable escalation in trade-based actions more than likely fuelling a period of risk aversion and in turn hampering the performance of the Australian Dollar.

Australia Exports by Country

LIVE: Australian Dollar in Focus on China GDP Data

Source – Trading Economics

AUD/USD Daily Chart – 100-DMA Nurturing Rebound

From a technical perspective, the AUD/USD exchange rate seems poised to climb higher despite collapsing through Ascending Channel support and the pivotal 61.8% Fibonacci (0.7131), as price remains constructively perched above the 100-day moving average (0.7059).

With AUD/USD carving out a Bull Flag formation just above key support and the RSI eyeing a cross back above its neutral midpoint, the path of least resistance seems skewed to the topside.

A daily close back above the 61.8% Fibonacci (0.7131) would probably generate a retest of the monthly high (0.7243), with a break and close above the 0.7250 mark needed to carve a path to test the September high (0.7413).

Conversely, a break below the 100-DMA (0.7059) could ignite a more extensive pullback and bring key psychological support at the 0.7000 level into focus.

LIVE: Australian Dollar in Focus on China GDP Data

AUD/USD daily chart created using TradingView

— Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

Building Confidence in Trading

Building Confidence in Trading

Recommended by Daniel Moss

Building Confidence in Trading





Source link

Continue Reading

Forex

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

Published

on

By


S&P 500 Index, US Fiscal Aid Talks, US Presidential Elections, Coronavirus – Talking Points:

  • Equity markets climbed higher during the Asian trading session as investors digested the progress in US fiscal aid talks.
  • House Speaker Pelosi’s 48-hour deadline on bipartisan negotiations threatens to trigger a period of risk aversion.
  • S&P 500 index poised to move higher as price carves out a Bull Flag continuation pattern.

Asia-Pacific Recap

Equity markets moved broadly higher during Asia-Pacific trade, with Australia’s ASX 200 index climbing 0.85% and Japan’s Nikkei 225 index climbing over 1.2%.

Mixed economic data out of China took some of the wind out of the sails of the cyclically-sensitive Australian Dollar, as it retreated from session-highs after the announcement.

Gold clamber back above the $1,900/oz mark and silver stormed 1.7% higher, as the haven-associated US Dollar slid lower.

Looking ahead, speeches from European Central Bank President Christine Lagarde and Federal Reserve Chair Jerome Powell headline the economic docket.

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

Market reaction chart created using TradingView

48-Hour Deadline on Stimulus Talks Could Haunt US Benchmark Indices

The ongoing battle between Republicans and Democrats on the specifics of a much-needed, and long overdue, fiscal aid package is likely to dictate the near-term outlook for US benchmark equity indices, as House Speaker Nancy Pelosi announces that she and Treasury Secretary Steven Mnuchin must reach an agreement within 48 hours “if we want to get it done before the election, which we do”.

Given that the US is currently averaging more than 50,000 new coronavirus infections a day and initial jobless claims rose by 898,000 (est. 825,000) in the week ended October 10, the need for additional fiscal support is becoming increasingly urgent.

Moreover, Federal Reserve Chairman Jerome Powell warned that the absence of “an additional pandemic-related fiscal package” could see growth “decelerate at a faster-than-expected pace in the fourth quarter”, while his Vice Chair Richard Clarida also stressed the need for “additional support from fiscal policy” given that “it will take some time to return to the levels of economic activity and employment that prevailed at the business cycle peak in February”.

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

Source – Worldometer

However, with Mnuchin stating that although he and Pelosi “continue to make progress on certain issues, we continue to be far apart on others” and adding that “getting something done before the election and executing on that would be difficult”, it seems relatively unlikely that a deal will be passed before the US presidential elections on November 3.

Furthermore, in the off-chance that a bill is agreed upon there is a distinct possibility that it will be voted-down in the Senate, given Senate Majority Leader Mitch McConnell favours a significantly narrower aid package that will cost roughly $500 billion and has stated that “the speaker insists on an outrageous amount of money”.

Therefore, a resurgence of risk aversion may be at hand if US policymakers are unable to successfully get a deal across the line before Speaker Pelosi’s deadline in two days.

‘Blue Wave’ Hopes Underpinning Equity Prices

Having said all that, recent price action suggests that the market may be looking beyond the lack of fiscal aid and could be beginning to price in a Biden presidency, which is expected to bring with it a substantial injection of stimulus if the Senate flips to a Democratic majority.

With only 14 days until the election and with Mr Biden holding a commanding lead over the incumbent President Donald Trump in the national polls, a Democratic administration certainly seems to be a likely possibility.

However, the rate of change in the RealClearPolitics Betting Average index suggests that Mr Trump could narrow the gap substantially in the coming days, if this trend were to continue.

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

Source – RealClearPolitics

To that end, although the absence of much-needed fiscal aid may weigh on US asset prices in the near term, the growing likelihood of a Biden win in November could see market participants begin to price in a more extensive government support package and in turn direct capital flows into risk-associated assets.

Conversely, further losses could be in the offing if incumbent President Donald Trump begins to claw back lost ground against his Democratic challenger, as is reflected in the S&P 500 index’s recent 4-day slide lower on the back of Trump’s nudge higher in the national polls.

Equities Forecast

Equities Forecast

Recommended by Daniel Moss

Get Your Free Equities Forecast

S&P 500 Index Daily Chart – Bull Flag in Play?

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

S&P 500 index daily chart created using TradingView

As expected, the US benchmark S&P 500 index’s inability to break above psychological resistance at the 3550 mark resulted in price sliding just over 3% and back towards support at the 50% Fibonacci (3424.25).

This retreat from the monthly high however, may prove to be a mere short-term pullback as price scurries away from the 50% Fibonacci and the RSI eyes a cross back above 60 and into bullish territory.

Moreover, with the MACD indicator tracking firmly above its neutral midpoint and the slope of the 21-day moving average (3384) notably steepening, the path of least resistance seems higher.

A break back above the August high (3524.50) would likely signal the resumption of the primary uptrend and carve a path for price to test the record high set on September 2 (3587).

Conversely, a breach of confluent support at the trend-defining 50-DMA (3396) and February high (3397.50) could ignite a more extended pullback and bring the 38.2% Fibonacci (3306) into focus.

S&P 500 4-Hour Chart – 50-MA Guiding Price Higher

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

S&P 500 index daily chart created using TradingView

Zooming into a 4-hour chart reinforces the bullish outlook depicted on the daily timeframe, as price carves out a Bull Flag continuation pattern and continues to scale the uptrend extending from the September low (3198).

Moreover, the development of the RSI and MACD indicators hint at swelling bullish momentum, as both oscillators continue to travel firmly above their respective midpoints.

A break above the October 16 high (3508.50) is needed to validate the bullish continuation pattern, with the implied measured move (3702) suggesting price could push to fresh record highs and test the psychologically imposing 3700 level.

On the other hand, a break and close below the 23.6% Fibonacci (3458.50) would probably encourage further selling pressure and generate a push to test the February high (3397.5).

S&P 500 Index IG Client Sentiment

S&P 500 Index to Track Progress on US Stimulus Ahead of Deadline

Retail trader data shows 38.27% of traders are net-long with the ratio of traders short to long at 1.61 to 1. The number of traders net-long is 7.97% higher than yesterday and 19.48% higher from last week, while the number of traders net-short is 0.50% higher than yesterday and 10.79% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests US 500 prices may continue to rise.

Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current US 500 price trend may soon reverse lower despite the fact traders remain net-short.

— Written by Daniel Moss, Analyst for DailyFX

Follow me on Twitter @DanielGMoss

How to Use IG Client Sentiment in Your Trading

How to Use IG Client Sentiment in Your Trading

Recommended by Daniel Moss

Improve your trading with IG Client Sentiment Data





Source link

Continue Reading

Forex

US Dollar, Euro, S&P 500, Oil, China GDP, Global PMIs, Brexit

Published

on

By


The Australian Dollar was the worst performing major currency last week. AUD price action weakened sharply in response to increasingly dovish rhetoric from the Reserve Bank of Australia. Reports that China has suspended coal imports from their Australian neighbors likely contributed to the move lower by the pro-risk Aussie against top safe-haven currencies like the US Dollar and Japanese Yen.

Forex for Beginners

Forex for Beginners

Recommended by Rich Dvorak

Forex for Beginners

US Dollar turbulence continued with the Greenback getting whipsawed by fiscal stimulus talks and political uncertainty. This theme might linger in the days ahead with investor angst and speculation swirling around potential outcomes for the fast-approaching presidential election. Investor expectations for a comprehensive coronavirus aid package before the November election were down-throttled as President Donald Trump and House Speaker Nancy Pelosi struggle to strike a stimulus deal, which looks due to political gambits.

In turn, the broad-based DXY Index edged higher on balance over the last five trading sessions and now trades flat month-to-date. Meanwhile, anti-fiat gold prices dropped about 1% this past week as the US Dollar strengthened against key FX peers. EUR/USD faced considerable selling pressure with spot prices falling 115-pips, or -1%. The move lower by EUR/USD price action also looks driven partly by deteriorating Eurozone economic prospects. This follows mounting restrictions on business activity aimed at curbing coronavirus second wave risk, which could bring crude oil prices into alignment with trader crosshairs.

USD Forecast

USD Forecast

Recommended by Rich Dvorak

Get Your Free USD Forecast

Pound Sterling volatility remains heightened in the midst of back-and-forth Brexit negotiations. Recent Brexit developments have highlighted stark differences between the UK and EU on trade, which could lead to a breakdown in talks and rekindle no-deal Brexit risk as key deadlines grow nearer. These aforementioned macro drivers look likely to persist in the week ahead and continue weighing materially on market sentiment. Notable shifts in trader risk appetite around these key themes could correspond with big swings in the direction of major stock indices like the S&P 500 or DAX.

Furthermore, the DailyFX Economic Calendar details several high-impact data releases and scheduled event risk this coming week. Third-quarter China GDP is slated to cross market wires on Monday, 19 October at 02:00 GMT and looks postured to set the tone for broader sentiment. The GBP, CAD, and NZD could get a jolt from the latest inflation figures due out of the UK, Canada, and New Zealand.

Expected commentary from top central bankers such as European Central Bank President Christine Lagarde, Federal Reserve Chair Jerome Powell, and Bank of England Governor Andrew Bailey littered throughout the week will likely be on the radar of traders as well. That said, global PMI reports on tap for release later in the week could steal the limelight and strongarm the direction of markets. What other critical themes and financial market developments are traders watching out for in the week ahead?

Trading Forex News: The Strategy

Trading Forex News: The Strategy

Recommended by Rich Dvorak

Trading Forex News: The Strategy

Fundamental Forecasts:

Euro Forecast: EUR/USD Outlook Bearish as Second Wave of Covid-19 Hits Europe

For a while now, the economic damage caused by the coronavirus pandemic has been expected to be less in Europe than in the US. Now, though, that may have to be re-assessed.

Gold to Retain Inverse Relationship to USD on Dovish Fed Guidance

The price of gold may continue to exhibit an inverse relationship with the US Dollar as the Federal Reserve retains a dovish forward guidance for monetary policy.

S&P 500 May Eye Higher Levels on Upbeat Earnings, Stimulus Hopes

The S&P 500 index may shrug off a technical correction and aim for higher levels, buoyed by strong corporate earnings and stimulus hopes. Election and growth risks to be watched.

Crude Oil Prices in Jeopardy Ahead of OPEC JMMC Meeting

Crude oil prices are at risk of breaking lower ahead of the OPEC JMMC meeting on October 19 after the IEA revised down its global demand estimates.

Mexican Peso Fundamental Forecast: Dependent on Presidential Election Outcome

USD/MXN tries to consolidate a bearish breakthrough as uncertainty grows around the US presidential election.

US Dollar (DXY) Forecast – Picking Up a Bid as Stimulus Deal Hopes Fade

The US dollar continues to nudge higher as markets remain on edge ahead of the US election, while US stimulus talks seem to be going nowhere.

GBP/USD Weekly Forecast: GBP/USD, EUR/GBP Eyes Brexit Latest

GBP caught in the crossfires of back and forth Brexit headlines. Choppy trading conditions to persist.

Australian Dollar Eyes China Q3 GDP Data, Earnings Rising Covid-19 Cases

The Australian Dollar will be closely watching Chinese Q3 GDP data amid a cascade of earnings data with growing concern about the impact of growing Covid-19 cases on the global economy.

Technical Forecasts:

EUR/USD Technical Outlook: Euro Enters Week with Uncertainty

The Euro is leaning lower at the moment, but that could change; week ahead may help decide a direction or just leave us with more sideways chop – what to watch.

British Pound Technical Forecast: GBP/USD, GBP/JPY, EUR/GBP

The British Pound threatened a downside break on Friday but quickly pulled back. What might be in store for next week as the UK moves closer to a no-deal Brexit?

Nasdaq 100, Dow Jones, DAX 30 Forecasts for the Week Ahead

A week of back and forth trading saw the Nasdaq 100 close slightly in the green, notching a third consecutive week of gains. With earnings season in full swing, here are the technical levels to watch.

Gold Price Forecast: Precious Metals Seeking Bullish Catalyst

Gold price action dropped by 1% this past week as precious metals struggled to maintain altitude in the absence of a needed bullish catalyst. Will the broader trend prevail or is more pain ahead for gold?

US DOLLAR WEEKLY PERFORMANCE AGAINST CURRENCIES AND GOLD:

Markets Week Ahead: US Dollar, Euro, S&P 500, Oil, China GDP, Global PMIs, Brexit





Source link

Continue Reading

Trending

Copyright © 2017 Zox News Theme.