One unexplainable day of USDCAD , when CPI (YoY) of Canada was released, this pair once again test 1.0740 level, but after this pair was trade lower very fast. SELL force was so strong I cannot understand why it was happen. USDCAD lost 100pips in 6 consecutive hours and stopped at 23.6 Fib retracement I show on the chart.( Look at the 1 I mark on the chart)
Next week is Christmas holiday of EU, North America including USA and Canada, New Zealand, Australia. Most traders go home for Holiday, and they just come back market after New Year. This is the longest holiday of Western culture. Thus, market is very quiet in those days, just Asian traders participate market.
Currently, I still hold my viewpoint about this pair is uptrend because there are a lot of reasons:
- What we had recent days ?. That is FED decided to unwind their Stimulus QE3. They begin taper next month from 85 billion to 75 billion. They also they will taper gradually in each Minutes and hike the interest rate in 2015. The QE3 will end before 2015.
- The 10 years T-bond rises to 2.9 today, and it could hit 3.0 benchmark next weeks due to FED taper. The demand for USD will be stronger next weeks.
- GDP Q3 of USA is better than expect: 4.1% vs 3.6% forecast.
US economy is on the recovery trend. Economic data prove Government Shutdown didn’t affect too much on US economy and this is the reason FED taper on last Wednesday. The economic prospect is so positive, and this is benefit for USD. This is an undeniable fact. Thus, those events will lift USD higher against other currencies.
Today is not a good day for Loonie. CPI (YoY) of Canada is not good as expect: 1.1% vs 1.2% forecast. Deflation worry is more and more visible. This is also the most concern of BoC : Deflation. BoC abandoned hawkish stance last two months cause of low ; this caused the uptrend move for Canadian Dollar recent months. BoC want and like this move. They want weak Loonie to support export especially export to USA. And they will not hike interest rate until reaches 2% benchmark, so BoC will not favour high value Currency in the time being.
Combine both fundamental elements from USA and Canada: I can see that USDCAD cannot lower, cannot move lower. This is absolute and definite.
Thus, the retracement of USDCAD last two days was just temporary: When North America traders come back the market; they will hit this pair to new high.
"Please try out my application I write for Forex traders to help them calculate many values such as lot size, pip,margin, : https://play.google.com/store/apps/details?id=sforex.solution
Any question, visit : https://www.facebook.com/Sforex.solution%22