USDCAD: We are going to use higher levels to get short again
Macroeconomic overview
The CAD hit its weakest close in more than two weeks against a broadly higher USD after hawkish speech from Fed’s Harker. The CAD was also hurt by falling oil prices and concern about some details of a trade surplus report weighing.
The CAD suffered as investors reassessed the prospect of a faster pace to U.S. interest rate hikes after Philadelphia Federal Reserve Bank President Patrick Harker said late on Monday he would be open to raising rates at the central bank's March meeting if growth in jobs and wages continues.
On the other hand, Minneapolis Fed President Kashkari released a dovish statement explaining the rationale behind his vote to leave adminstered interest rates unchanged at the FOMC's January 31 - February 1 meeting. He said he sees no immediate risks to financial stability owing to rising asset prices and the U.S economy may not have reached full employment yet, both dovish assertions.
Kashkari said he believes there is more slack in the U.S. labor market today than before the financial crisis and that he sees no signs of labor costs rising in such a way as to put upward pressure on inflation. He downplayed the rise in survey-based and market-based measures of inflation expectations, saying their increase since the presidential election result does not deserve too much weight. Likewise, Kashkari said his economic forecast does not factor expectations of fiscal stimulus or tax and regulatory changes that might promote business activity.
Canada posted a CAD 923 million trade surplus in December, thanks largely to booming crude oil exports. November's surplus was also revised sharply higher. But while overall exports rose by 0.8% in December, export volumes actually fell by 1.4%.
Technical analysis
Today’s drop of the USD/CAD may suggest that recent corrective move on this pair is over. The pair still has not touched falling December-February trendline, which is the nearest resistance level now.
Trading strategy
The selling signal is not strong enough to revise our current strategy, but we will consider lowering our short-term sell order. Long-term outlook remains bearish.
GrowthAces.com - Daily Forex Trading Strategies
The CAD hit its weakest close in more than two weeks against a broadly higher USD after hawkish speech from Fed’s Harker. The CAD was also hurt by falling oil prices and concern about some details of a trade surplus report weighing.
The CAD suffered as investors reassessed the prospect of a faster pace to U.S. interest rate hikes after Philadelphia Federal Reserve Bank President Patrick Harker said late on Monday he would be open to raising rates at the central bank's March meeting if growth in jobs and wages continues.
On the other hand, Minneapolis Fed President Kashkari released a dovish statement explaining the rationale behind his vote to leave adminstered interest rates unchanged at the FOMC's January 31 - February 1 meeting. He said he sees no immediate risks to financial stability owing to rising asset prices and the U.S economy may not have reached full employment yet, both dovish assertions.
Kashkari said he believes there is more slack in the U.S. labor market today than before the financial crisis and that he sees no signs of labor costs rising in such a way as to put upward pressure on inflation. He downplayed the rise in survey-based and market-based measures of inflation expectations, saying their increase since the presidential election result does not deserve too much weight. Likewise, Kashkari said his economic forecast does not factor expectations of fiscal stimulus or tax and regulatory changes that might promote business activity.
Canada posted a CAD 923 million trade surplus in December, thanks largely to booming crude oil exports. November's surplus was also revised sharply higher. But while overall exports rose by 0.8% in December, export volumes actually fell by 1.4%.
Technical analysis
Today’s drop of the USD/CAD may suggest that recent corrective move on this pair is over. The pair still has not touched falling December-February trendline, which is the nearest resistance level now.
Trading strategy
The selling signal is not strong enough to revise our current strategy, but we will consider lowering our short-term sell order. Long-term outlook remains bearish.
GrowthAces.com - Daily Forex Trading Strategies