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Will GDP lift the loonie?The Canadian dollar is trading quietly ahead of the release of Canada's GDP for October later today. The loonie took advantage of broad US weakness on Wednesday, posting gains of 0.53%, its best daily showing since December 7th. Canada's economy was stagnant in September, with a paltry gain of 0.1%. October, however, is expected to show a strong rebound. Statistics Canada is projecting a gain of 0.8% m/m, but some solid data since this projection has added upside risk, which could translate into a gain of 1.0%. I would expect a GDP reading of 0.8% or higher to provide a boost for the Canadian dollar. A strong GDP report could also have an impact on the Bank of Canada, which has signalled that it plans to embark on a series of hikes in 2022 (a much faster pace than the Fed). A rate hike is widely expected in Q1 2022, but the date of lift-off remains uncertain and will likely be determined by the strength of economic indicators. April is the most likely date at the present time, but an acceleration in the October GDP and higher inflation could push that date forward, perhaps as early as January. There is a lot of uncertainty surrounding the Omicron variant, and the screaming headlines continue to impact risk appetite as well as risk barometers such as the Canadian dollar. The currency slid 1.3% last week, as Omicron raged across Europe and the US, raising fears of new health restrictions and possible lockdowns. Risk sentiment has rebounded sharply this week, as more reports show that although Omicron is much more contagious than Delta, the symptoms have been less severe. The positive news has sent the Canadian dollar higher this week. The roller-coaster in the currency markets could well continue for the rest of December, as the markets are being driven by headline volatility rather than market trends. Therefore, caution in these turbulent, illiquid markets is strongly recommended. USD/CAD has support at 1.2756. Below, there is support at 1.2615 There is resistance at 1.2987. Above, there is resistance at 1.3077
by OANDA
Swing trading opportunity! + Fundamental DriversHello traders! TD Securities have opened a new buy trade on usdcad entry: 1.2413 stop: 1.2200 target: 1.2750 Rationale: We add a long usdcad position to our fx model portfolio and target a move to 1.2750. A lot of good news appears in the cad price. Since September fed meeting, the cad has registered one of the largest builds on our positioning tracker. This has helped to drive a discount on our cross asset fv measure (aprox. 1.25) and an even larger discount on our implied level derived from just global growth expectations and risk sentiment (1.27). Technicals also suggest sufficient signs of bottom in the pair (such as macd). Ourrates team also believes the global frontend repricing has matured. Looking an OIS curve, we think risk/reward is unappealing to price in more tightening at the April 2022 meeting (which is already rather heroic assumption in our view) of for 3 hikes by July next year. While CAD's oil beta has appreciably tightened in the recent weeks, the terms of trade boost may be well advanced as our commodity team expects WTI. oil to average $86 this quarter. We also expect a firmer USD in the weeks ahead, driven by outperformance against the low yielders and sticky fed pricing as well as seasonal boost that tends to occur in November. Fundamental Drivers: United States Dollar (USD) Fundamental Bias: Weak Bullish Primary driver: 1. The monetary policy outlook for the fed Rationale: More hawkish than expected sums up the sep meeting. The FOMC gave the go ahead for the November tapering announcement as long as the economy develops as expected with their criteria fo substantial further progress close to being met. The biggest hawkish tilt was the announcement about a faster pace of tapering, with Chair Powell saying there is broad agreement that tapering can be concluded by mid 2022. Inflation projections were hawkish, with the fed projecting core pace above their 2% until 2024. On labour, Chair Powell said he thought the substantial further progress threshold for employment was all but met and explained that it won't take a very strong September jobs much steeper than markets were anticipating with seven hikes expected over the forecast horizon from just two previously. It is important here to note though that even though the path was steeper, if one compares that to a projected Core pce>2% for 2022to 2024, the rate path does not exactly scream fear when it comes to inflation. ALLin all, it was a hawkish meeting. The upcoming NOV3rd meeting is expected to see the bank formally announce tapering at a a pace of 15billion per month starting in dec. With that largely expected, focus will fall on rate expectation where eurodollar futures implythree rate hikes between jun and dec 2022, which seems too aggressive right now son any push back or confirmation of that pricing arguably be a bigger driver for the usd and us rates this week compared to the expected tapering. Primary driver: 2. Real yields Rationale: With q4 taper start and mir 2022 taper conclusion on the card, we think further downside in real yields will be a struggle and probability are skewed higher given the outlook for growth, inflation and policy, and higher real yield should be supportive for the usd in the med term. primary driver: 3. The global risk outlook Rationale: One supporting factor for the usd from June was the onset of downside suprises in global growth. However, there has been a growing chorus of the market participants looking for a possible bounce in growth stat q4 after the covid and supply chain related slowdown in q3.If we do indeed see a pickup in growth, while inflation is still elevated, that would mean a reflationary environment, which is usually a negative input for the dollar, so we want to keep that in mind when assessing the incoming us economic data in the next few weeks. primary driver: 4. economic data rationale: Very busy week for economic data with nfp on Friday and the usual slew of economic data that feeds into nfp being releases throughout the week ism report, adp. However, with the FOMC coming up on Wednesday, the data feeding into nfp will most likely take a back seat until we hear from the fed and depending on the type of tone that will largely impact how markets react to Fridays nfp release. Primary driver: 5. CFTC analysis Rationale: Latest CFTC data showed a positioning change of - 1477 with a net non commercial position +34457. Positioning isn't anywhere near stress levels for the usd, but the speed of the build up in large speculator positioning has been sizeable 1 year look back period. Thus even though the med term bias remained unchanged it does mean usd could be sensitive to mean reversion risks while still trading close to ltd highs. This weeks FOMC will take centre stage though. Canadian Dollar CAD Fundamental Bias: Bullish Primary driver: 1.The monetary policy outlook for The BoC Rationale: At their oct meeting the bank suprised the markets by decided to put an early qe purchases and also updated their forward guidance to suggest and earlier liftoff in rates by explaining that they now see economic slack being absorbed by die middle quarters of 2022. The initial reactions very bullish as one would expect an saw the cad appreciate across the board.We think the biggest risk to further upside for the cad from here is the fact that a lot of these positives confirmed by The BoC has already been reflected in both the cad and rates markets over the past few weeks. The Cad has seen a similar run to the upside back in 2021 q1 with the boc's hawkish tilt, and similarly to that we feel current prices for rates and cad already reflect a great deal of positives. Thus even though the med term outlook remains tilted to the upside for the cad there is a risk of seeing some unwind of the recent upside and is something to be mindful of when making any med term allocations to the upside in the cad. Primary driver: 2. Commodity linked currency with dependency on oil exports Rationale Oil staged a massive recovery after hitting rock bottom in 2020 and the move higher over the recent months has been driven by supply and demand opec production cuts, improving global economic outlook an improving oil demand outlook, even though slightly pushed back by delta concerns, rising inflation expectations. Even though further gains for oil Will arguably prove to be an uphill battle, the bias remains which could affect the cad from an inter market point of view, but as long as the med term view for oil remains higher it should be supportive for metro currencies like the cad. The recent energy crisis affecting large parts of the globe's placed upside pressure in oil, gas and coal and has support for the cad. A possible risk for oil prices and by connection the cad is any attempts by the us or opec+ to calm down prices. On the us side they could opt to release more of their reserves and on specs side they could announce additional increases production output. This week we have another opec+ meeting so keeping that on the radar for the cad will be important in the week ahead. Primary driver 3. Developments surrounding the global risk outlook rationale: As a high beta currency, the cad benefited from the markets improving risk outlook coming out of the pandemic as participants moved out of safe havens. As a pro cyclical currency the cad enjoyed upside alongside other cyclical assets supported by reflationand post recession recovery bets. If expectations for the global economy remains supportive the overall positive outlook for risk sentiment should be supportive for the cad in the med term, but recent short term jitters ar timely reminder that risk sentiment is also a very important short term driver. primary driver: 4. CFTC analysis Rationale Latest CFTC data showed a positioning change of +14244 with a net non-commercial position of +3320. With a lot of positives in the price for the cad and the from and yields, it is however encouraging to see that positioning isn't stretched for either large specs or leveraged funds, and suggest that further upside could of course be possible if short term sentiment for oil and risk assets remain favourable. Thank you for reading! Have a great week! :) Vitez
Long
by Vitezabraham
Will Canadian job data lift loonie?The Canadian dollar is in positive territory in the Friday session. Currently, USD/CAD is trading at 1.2619, down 0.34% on the day. Earlier in the day, the pair moved into 1.25-territory. It has been a busy week for the Canadian dollar, which started the week with strong losses but has partially recovered. The upward swing could continue on Friday, as Canada's job data for July is expected to show strong growth. The economy is projected to have created 100 thousand new jobs, while the unemployment rate is expected to fall to 7.3%, down from 7.5%. If the readings are within expectations, the Bank of Canada may consider scaling down its QE programme, which would be bullish for the Canadian dollar. The Bank of Canada opted to remain cautious at its policy meeting and did not make any moves. The message to the markets was dovish, with policy makers warning that a fourth wave of Covid-19 and continuing supply-chain issues could hurt the recovery. Still, the Bank said that it expected the economy to improve in the second half of 2021. In the US, inflation is one of the most important issues for the markets, which means that US inflation indicators are sure to find themselves under close scrutiny. The US will release the Producer Price Index (PPI) for August, with the consensus at 8.2%, compared to 7.8% in July. Inflation remains red-hot in the US, with the Federal Reserve stubbornly insisting that surge in transitory and that inflation will ease. If we continue to see inflation rising in the final months of 2021, investors will become more sceptical of the Fed's stance, and policymakers may have to adjust monetary policy in order to curb inflation, which is well above the Fed's target of 2%. On the upside, there is resistance at 1.2719. This is followed by resistance at 1.2785. USD/CAD is testing support at 1.2625. Below, there is support at  1.2465
by OANDA
Shorts covering quicklyThe evolutionary break of 1.260x unlocked the floodgates and buyers successfully captured the higher high. But the revolutionary attack would not be complete without capitulation and be as follows: 1. Taking 1.295x (there is no question of having broken above July 19th highs, since sellers have given up a lot of ground for it, will unlock a test of 1.331x as a minimum flow 2. Using 1.317x for reference. The idea behind this attack, as clear from this example, consists of forcibly clearing a way through the defences to unlock a momentum move. Here sellers themselves have to cover their positions, so that triggers the cascading and comradeship. All we need to concentrate our forces on, is attacking if above 1.295x, till then we can continue sitting on our hands in a neutral position if not already loaded from below. Amongst other things, we also need to consider the forcible breakdown in Oil to $57 which will can add fuel to the attack.
Long
by ridethepig
1
ridethepig | USDCAD Market Commentary 12.08.2021Looking for continuation to the downside here in USDCAD with an initial target of 1.230x, extended targets at 1.200x and stop loss at 1.260x. Also actively looking at deploying additional positions EURUSD, GBPUSD and USDSEK with the latent USD softness. This has potential for follow through in August. ↳ Technically we are approaching key resistance levels, with support already breached, the developments imply we are not oversold. here is a lot of room to attack below, expecting an accelerated move in the coming sessions/days.
Short
by ridethepig
6
USDCAD gyrates inside key SMA envelope as FOMC week beginsUSDCAD holds onto a three-week-old support line, also staying between 50 and 100-SMAs of late. Even so, the gradually rising RSI line and an impending cross-over of the MACD line to the signal line keep buyers hopeful. However, a clear upside break of 50-SMA level near 1.2610 becomes necessary for the bulls to battle the 1.2680 and the 1.2730 resistances. On the top, the monthly high near 1.2810 becomes the buyers’ favorite, given the upside momentum gains fundamentals support from the Fed and BOC CPI. Bears have a comparatively tough task as the stated support line guards the quote’s immediate declines near 1.2560. Following that, 100-SMA level of 1.2525 and the early July top near 1.2450 will be crucial to watch. In a case where USDCAD sellers keep reins past 1.2450, an extended south-run to late June’s low near 1.2250 becomes the key to follow.
Long
by MTradingGlobal
#EURCAD: Bottom's inI suspect the $EURCAD cross pair is reversing in the weekly timeframe here, we might see a substantial rally as oil could be peaking here, and the $Euro is oversold. The setup calls for a potential rally to 1.53, with risk down to 1.47 if the trade fails. Ideally you try to get in on dips after the market is open, keep an eye on price action for an entry. Alternatively you can average in during the day to not be left out in case there's no retrace. Cheers, Ivan Labrie.
Long
by IvanLabrie
3
ridethepig | CAD for the Yearly Close📌 @ridethepig G10 FX Market Commentary - CAD for the Yearly Close A very good time to update the CAD maps as we approach the key 1.27xx pivot areas. For six years this level has been relevant and has convinced me it cannot easily be done away with. Since the overwhelming pressure on USD remains, what we are talking about here is likely a flash crash of some kind, I maintain that the positional sweep towards 1.20xx and 1.14 is within reach and losing this key pivot will make it easier to come to terms with. For those who remember the infamous Oil breakdown, the chart is always worth looking at for collateral moves in energy and commodity currencies. CAD in the wider sense will have large inflows from the Biden victory as an immediate and defensive position. The move somehow brings 2022 into the spotlight as very major low forming, the result of that will grind Canada to a halt for a number of years. You can see on the technical side that again we are keeping things simple, a breach of the pivot will open a waterfall towards initial targets of 1.206x and extensions below at 1.138x. We will dig a lot deeper into the macro pictures and charts once we get these maps out the way with. Thanks as usual for keeping the feedback coming 👍 or 👎
Short
by ridethepig
4
INSTITUTIONAL TRADE: Long USDCAD – MORGAN STANLEYMorgan Stanley recommends a buy in USDCAD. Rationale: We think global reflation is largely in the price, leaving limited room for global growth to surprise to the upside. US growth outperformance relative to Canadian growth (and higher US real yields) are consistent with USD/CAD gains. We think oil prices will struggle to rally above $70bbl, weighing on CAD, and investors are currently positioned short USD/CAD. Key catalysts: The BoC’s taper pace and output gap projection, oil prices, US Fed policy guidance. Over the next few months, we expect CAD to soften as the recent acceleration in global growth hits a slower inflection point, domestic growth meets (but does not exceed) market expectations and US real yields rise as a Fed taper approaches. We think Brent is unlikely to rise above $70bbl in the near term, 2y yield differentials no longer exert downward pressure on USD/CAD, and investors are already positioned for CAD strength. Positioning: Investors maintained long USD/CAD positions for much of 2020 despite the grind lower in the pair. However, following CAD outperformance year-to date in 2021, CFTC data suggest that investor positioning has now flipped to being most long CAD among all G10 currencies. That switch reflects two changes: a rise in long CAD positions among asset managers to decade highs, and a paring back of leveraged funds short CAD positions. Long CAD positions, therefore, mostly reflects net positioning among long-term investors. While long CAD positioning mostly reflects wagers made by long-term investors, backtesting reveals that both leveraged fund and asset manager positioning have historically been contrarian indicators, rather than momentum indicators. A contrarian indicator means that long positioning means poor forward returns, and vice versa. A similar picture emerges in other positioning data. A key trader survey (the daily sentiment index) indicates that investors are bullish CAD. While this survey has historically been a momentum indicator when investors are extremely bearish on CAD (i.e., bullish USD/CAD), it can be a contrarian indicator when investors are extremely bullish on CAD (i.e., bearish USD/CAD). Risks: The risk is that the USD continues to broadly depreciate amid lower US real yields and wider breakevens, which would likely push USD/CAD below 1.20 to a meaningful degree.
by thunderpips
2
CAD strength something the BOC is focused onShould we be concerned about the recent strength for the canadian dollar? Among a wide range of currencies, it is leading the global FX pack to the upside against the US dollar with a gain of 4.7% YTD. During a press conference yesterday, BOC Governor Macklem said that they are closely monitoring the recent gains in the CAD, explaining that a rapid further rise could jeopardize the economic outlook as it could be a headwing for exports. With over 70% of Canada's exports going to the US alone, the concern makes sense and something we need to pay attention to, especially with the USDCAD currently also trading at lows las seen in 2017. However, the Governor also said something that is very important to take note of. He explained that "If the dollar were to continue to move -- particularly if it's not reflecting good developments for Canada -- that could become more of a headwing". That tell us two important things. Firstly, that the bank sees the current appreciation as justified by the current fundamentals. Secondly, that the bank will only get concerned with further gains if the fundamentals change. Thus, the bullish bias remains firmly intact, but the current price level in USDCAD has definetely got the bank's attention and is something we need to consider for policy going forward.
by thunderpips
5
Chart of the day: Rates markets are pricing...Rates markets are pricing in faster policy normalization for the BOE With the Bank of England just a few days away, it’s always a good idea to reflect on the rates market and see what it’s pricing in. Looking at the SONIA quarterly futures rates we can see that markets are pricing in much faster policy normalization for the UK compared to the likes of the FED. SONIA futures are pricing in a first hike from the BOE by SEP 2022 (compared to March 2023 for the FED), and a total of 3 hikes (assuming 10bsp each) by March 2023. How does this information help us? It is helpful as it shows us a bit of a disconnect between the recent weaker price action, we’ve seen in sterling versus what the rates markets are implying for policy normalization. Thus, even though a lot of policy normalization expectations are baked into the rates market, the same is not reflected in sterling’s price action just yet. For now, consensus is not expecting the BOE to follow, the BOC’s lead by tapering asset purchases. But arguably the bigger focus will fall on the BOE’s rate hike projections.
CME:SONZ2021
by thunderpips
USD/CAD FIST ANALYSIS: Bank of Canada Meeting PreviewHi traders, here is a preview of the USDCAD pair ahead of the BoC meeting later today. Canada reported strong market indicators during this month. The Ivey PMI was reported at 72.9 vs 62 expected, and employment change and the unemployment rate beat forecasts significantly. This led to rumors that the BoC could increase their economic outlook for 2021 (which is likely) and that the Bank could begin quantitative tapering as early as this Summer. Now, the problem is that most of the good news is already priced in the market. Hedge funds have been heavily bullish on CAD, but have started to trim their long positions since early March. This could increase selling pressure in the currency, and cause a "buy the rumor, sell the fact" effect after the BoC meeting. Falling oil prices have also been bullish for USDCAD (blue line, inverted), but Canadian vs US 2-year yields remain bearish for the pair. Now, technials show a strong uptrend this week as markets are positioning themselves for a weaker CAD ahead of the meeting. This morning, the pair broke above a bullish flag pattern and continued higher on strong buying volume. Since most of the good news is already priced in the Canadian dollar, a dovish surprise could shoot the pair higher, possibly retesting the March highs around 1.2750. Find our posts interesting? Please hit the "LIKE" button to support us in our work. Thanks a lot!
Long
by MujkanovicFX
Will Canada job report boost CAD?The Canadian dollar has reversed directions on Friday and recorded slight gains. Currently, USD/CAD is trading at 1.2592, up 0.25% on the day. It has been a relatively quiet day week for the pair, but that could change in the North American session, with the release of key employment numbers (12:30 GMT). Canada's economy continues to grapple with the Covid-19 crisis, and the country's vaccine rollout has been on the sluggish side. At the same time, the economy is slowly finding its footing, and the Bank of Canada expects positive growth in 2021. The labor market surged in February, adding 259.2 thousand jobs. The April estimate stands at 101.5 thousand, and if the reading is within expectations, there is a strong likelihood that the Canadian dollar will respond with gains. The Canadian dollar has looked sharp of late, gaining 1.38% against the greenback in March. The economic recovery in the US has helped rejuvenate Canada's export sector, with 75% of Canadian exports going to the US. As well, the improvement in the global economy has raised the risk appetite for minor currencies like the Canadian dollar. Another key factor that has boosted the currency is the Bank of Canada's announcement that it plans to taper its purchase of government bonds. The QE programme has been a key tool in keeping interest rates low during the Covid pandemic, and the move to reduce bond purchases would make Canada the first of the G-7 members to take such a step, which could occur as early as the next policy meeting on April 21st. In contrast, the Federal Reserve is not expected to taper QE before 2022. CAD has support at 1.2521. Below, there is support at 1.2465. There is a pivot point at 1.2584. On the upside, 1.2640 was under strong pressure during the week. This is followed by resistance at 1.2703.
by OANDA
Ivey PMI could boost Canadian dollarThe Canadian dollar has reversed directions on Tuesday and posted slight losses. Currently, USD/CAD is trading at 1.2549, up 0.25% on the day. The Ivey PMI rebounded in impressive form in February, rising to 60.0, well into expansionary territory. This followed two straight readings below the 50-level, which indicated contraction. The street consensus stands at 62.0 for March, and a read within expectations could boost the Canadian dollar. A booming house market in Canada and elsewhere has raised fears of a housing bubble. Soaring house prices are nothing new in major urban centers such as Toronto and Vancouver, but this red-hot market has spread across the country. However, the Bank of Canada will be unwilling to make any moves such as raising interest rates, given the fragility of the Canadian economy. The recovery could be a long one, as Canada's vaccine rollout has been unimpressive, and Covid continues to weigh on the economy.  BoC Governor Tiff Macklem has called the price increases in housing "unsustainable", but with mortgage rates at an ultra-low 1.5%, demand will likely remain strong, keeping house prices at very high levels in the near future.  If mortgage rates suddenly rise, it could trigger a significant drop in house prices and drag the Canadian dollar down as well The US dollar has lost some of its lustre, as US Treasury yields have retreated. The greenback failed to take advantage of a stellar Nonfarm Payrolls report on Friday, which rose to 916 thousand, up from 379 thousand. With the Biden administration working on a massive infrastructure package, there are expectations that upcoming NFP prints will exceed the 1-million mark, as the US economy continues to gather steam. There is resistance at 1.2640. This is followed by resistance at 1.2703. n the downside, there is pressure on support at 1.2521. Below, there is a support level is at 1.2465
by OANDA
CDN slightly higher ahead of job reportThe Canadian dollar is slightly higher in the Friday session. Currently, USD/CAD is trading at 1.2550, up 0.18% on the day. The Canadian dollar has enjoyed a solid week, with gains of close to one percent. The currency could pad those gains before the week is out, if Canada's job numbers improve in February as expected. The street consensus is that the economy created 98.5 thousand jobs, which would be a huge turnaround, after the dismal read of -212.8 in January. The unemployment rate is expected to fall to 9.2% from the current 9.4%.  Canada's recovery has been a bumpy one, with the Covid vaccine rollout progressing slowly and lockdowns hampering economic growth. Still, there are positive signs as well, and the jump in oil prices has been good news for the economy and the Canadian dollar. Earlier in the week, the Bank of Canada sent an optimistic message to the market, stating that the economy was proving more resilient to a second wave of Covid-19 than expected. The bank kept interest rates at a record low 0.25%, and said rates would remain at these low levels until economic slack was absorbed. The BoE does not expect this to occur prior to 2023. Despite this optimistic message, the bank gave no clues that it was considering tapering its stimulus program. Over in the US, the focus will be on inflation, with the Producer Price Index expected to slow to 0.4% in February. This would mark a sharp drop from the 1.3% gain beforehand.  USD/CAD faces resistance at 1.2738, followed by 1.2821. Below, there is support at 1.2491, followed by 1.2409.
by OANDA
1
150 pips at USDCADIf you are looking for trades that can be executed quickly and have a good ratio. See USDCAD! About the 3: 1 ratio The potential profit is 150 pips at 1.2822 levels. The minimum stop that can be used is 1.2620 or 50 pips (the more conservative version is 1.2580) Regarding the quickness of movement: A decision on the interest rate by the Bank of Canada will be published today. Even if there is no change in interest rates, it is very likely that we will see a movement. Which allows for performance throughout the day. There are less than 9 hours left until the news! Technically, we have reason to buy even after the break of the one-hour trend! If you have questions about how to trade this or another situation, contact us! To support us, like and comment!
Long
by ForexTrendline