Above you can see the USD-CAD Daily chart with the bullish signal that my strategy given me a week ago. As said in a previous "idea", I didn't follow the signal waiting for a pullback on the dotted line before opening a bullish position. The reason was very simple: few days after there was the meeting of the Bank of Canada and you can have a wonderful strategy, a fantastic indicator but against a central bank, they are worth less than zero.
Between less than 30 mins, there will be the Non-Farm Payrolls; I'm not Nostradamus, I don't know how will be the data. I think employment will rise less than 200K, but it's a guessing game, like if I said France will win the next soccer World Cup.
What I know is that the conditions have changed. In the Statement released last Wednesday by the Bank of Canada, we can read: "In Canada, economic data since the April MPR have, on balance, supported the Bank’s outlook for growth around 2 percent in the first half of 2018. Activity in the first quarter appears to have been a little stronger than projected. Exports of goods were more robust than forecast, and data on imports of machinery and equipment suggest continued recovery in investment."
And: "Overall, developments since April further reinforce Governing Council’s view that higher interest rates will be warranted to keep inflation near target. Governing Council will take a gradual approach to policy adjustments, guided by incoming data. In particular, the Bank will continue to assess the economy’s sensitivity to interest rate movements and the evolution of economic capacity."
Translated, in the next meeting on July 11, the Bank of Canada will raise the rates of 25bp.
A currency pair is the mirror of two economies and in the middle-term, will tend to be worth the correct ratio of the two economies. Usd-Cad is at a high level for several reasons that I won't explain here, in the middle-term it will fall at least in the area 1.20/1.23 (currently the correct value). So, we must open a short position? Not, because in the short-time, the speculation will move the currency pair (even though, not a big movement). So it is possible to see Usd-Cad in the area 1.3265/1.3285 as my strategy suggested, before starting the bearish movement.
All of this, if won't change the conditions again, otherwise, will change the analysis as well. What we should do is to find good levels where to start to open part of the position.
Between less than 30 mins, there will be the Non-Farm Payrolls; I'm not Nostradamus, I don't know how will be the data. I think employment will rise less than 200K, but it's a guessing game, like if I said France will win the next soccer World Cup.
What I know is that the conditions have changed. In the Statement released last Wednesday by the Bank of Canada, we can read: "In Canada, economic data since the April MPR have, on balance, supported the Bank’s outlook for growth around 2 percent in the first half of 2018. Activity in the first quarter appears to have been a little stronger than projected. Exports of goods were more robust than forecast, and data on imports of machinery and equipment suggest continued recovery in investment."
And: "Overall, developments since April further reinforce Governing Council’s view that higher interest rates will be warranted to keep inflation near target. Governing Council will take a gradual approach to policy adjustments, guided by incoming data. In particular, the Bank will continue to assess the economy’s sensitivity to interest rate movements and the evolution of economic capacity."
Translated, in the next meeting on July 11, the Bank of Canada will raise the rates of 25bp.
A currency pair is the mirror of two economies and in the middle-term, will tend to be worth the correct ratio of the two economies. Usd-Cad is at a high level for several reasons that I won't explain here, in the middle-term it will fall at least in the area 1.20/1.23 (currently the correct value). So, we must open a short position? Not, because in the short-time, the speculation will move the currency pair (even though, not a big movement). So it is possible to see Usd-Cad in the area 1.3265/1.3285 as my strategy suggested, before starting the bearish movement.
All of this, if won't change the conditions again, otherwise, will change the analysis as well. What we should do is to find good levels where to start to open part of the position.