Why is the Canadian Dollar Outperforming Expectations?A Deep Dive into the Unexpected Resilience of the CAD
In a landscape marked by economic uncertainty, the Canadian dollar has defied the odds, exhibiting remarkable resilience. This unexpected strength is a result of a complex interplay of factors, including the Federal Reserve's monetary policy, market dynamics, and global commodity trends.
The Federal Reserve's Pivotal Role
The Federal Reserve's shift towards a more accommodative monetary policy has been a key driver of the CAD's rally. The Fed's hints at potential rate cuts, especially in response to a weakening labor market, have weakened the U.S. dollar, boosting the appeal of other G10 currencies, including the CAD. This has created a favorable environment for the Canadian dollar, as investors seek higher-yielding alternatives to the U.S. dollar.
Short Covering and Positioning Dynamics
Another significant factor contributing to the CAD's strength is a wave of short covering. Traders had previously bet against the CAD, anticipating a divergence between the easing cycles of the Federal Reserve and the Bank of Canada. However, as the U.S. dollar weakened and the CAD began to rise, these short positions became increasingly unsustainable. Traders were forced to unwind their bets, adding momentum to the CAD's rally.
The Impact of Rising Oil Prices
Canada's significant oil exports make it particularly sensitive to fluctuations in oil prices. The recent increase in crude oil prices, driven by geopolitical tensions and potential supply disruptions, has provided a further boost to the CAD. As a major oil producer, Canada benefits from higher oil prices, which can lead to increased exports and a stronger currency.
Assessing the Risks and Challenges
While the CAD's rally has been impressive, it is important to acknowledge the potential risks and challenges that could undermine its momentum. The Bank of Canada's rate cuts, although expected, could narrow yield differentials and put pressure on the CAD. Additionally, ongoing global uncertainties and subdued risk appetite could limit the loonie's upside potential.
Key Data to Watch
Several key data releases will be closely monitored in the coming weeks. Canada's GDP data will provide insights into the health of the Canadian economy and could influence the Bank of Canada's policy trajectory. Meanwhile, U.S. economic reports, such as PCE, will be watched for potential shifts that could affect the USD/CAD exchange rate.
Conclusion
The Canadian dollar's unexpected resilience is a testament to its strength in a challenging economic environment. While the current momentum is positive, investors should remain cautious and closely monitor key economic indicators. By understanding the underlying factors driving the CAD's rally and assessing the potential risks, investors can make informed decisions about their currency exposure.
Canadian-dollar
CADUSD: Looking very bearish to meI'm expecting to see USD strength through March with a Hawkish Fed that has strength ibn their economy, compared to all other crosses.
Looking at the 4hr chart I'm seeing a couple of bearish engulfing candles and therefor looking for a short in an LTF.
There is very choppy water between 0.735 and 0.7366 so we may see a lot of indecision here but I'm overall bearish and expect the drop down to major support.
AUDCAD: Awesome breakout, time to fall back?Had a great breakout of the falling wedge that I called out in an earlier idea (I missed the trade as it happened sooner than I expected), but now I believe we'll fall back from resistance (we can see some rejection on the daily) before confirming the trend change higher.
No real fundamentals for this, pure price action.
EURCAD: Friday rejection from dynamic trendlineWe saw another rejection from a long standing descending dynamic trendline on Friday, I'm expecting a fall from here back down to support around 1.4275.
Will be closely watching action around the 1.435 mark, but overall we're printing HH's and HL's on the higher timeframes (although still within a range), let's see what happens but I think we're definitely headed south from here.
Bullish on the 1 Hour, Should we TRADE ...?
After successive trades to liquidity target, the market seems to have lost its Bearish momentum for a bit. This has seen the market take out our zone in a bid to turning Bullish.
For now, we are on a middle course. With the 1 hour reversing Bullish while the 4 hour maintains its Bearish momentum, it is difficult to say whichi direction the market would go for certain.
A second look, not at the charts, but to reservoir of knowledge would reveal that the 1 hour is expected to move in the direction of the 4 hour. And so the 1 hour Bulish impulse is expected to form a retracement for the 4 hour chart, following which the 1 hour impulse will be wiped out by the 4 hour extension.
This is my perspective on this pair
✅GBP_CAD LOCAL LONG🚀
✅GBP_CAD broke out of the narrowing wedge
Which made me bullish on the pair
And the price is now retesting the broken
Resistance line which became a support
So I think that we will see a rebound
And a retest of the breakout high above
LONG🚀
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usdcad canadian dollar start of the big bull phase possible The Canadian dollar is in the consolidation phase its very possible point of reversal as this zone is already be tested and respected many times. I am expecting the start of a new big side trend as you see divergence on the MACD indicator as well its sign of losing strength.
CAD/JPY Signal - JPY Leading Economic Index - 7 Sep 2021CADJPY has broken the support trendline prior to the JPY Leading economic index data, which is an economic indicator that consists of 12 indexes such as account inventory ratios, machinery orders, stock prices and other leading economic indicators. Technically the pair has broken the support trendline near the resistance trendline, and the RSI is pointing to downside.
Great Buy Opportunity In USDCAD! Disclaimer: this is an idea, trade off it at your own risk
USD CAD has just made a false breakout and has made a strong move up and broke out of the 4H trend, it has also reached above the 200 EMA line.
We should be waiting for the retracement as it approaches the 50% - 61% fib area and look for the perfect buy in that zone (140 - 260 PIPS in Profit)
Then we could possibly look for another buy as it reaches closer to the range high.
If it drops down to the reverse zone we should be looking for it to test the range low support area, and if it breaks out of the range low then we should look for sells as it will approach the February 2018 support area and then look for new structure, potentially a reverse.
CADJPY Sell Sell SellStill time to catch this one. Nice profit from the buy now secured - that was shared on here last week too.
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