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Loonie

CADJPY inverse H&S pattern setting up. On August 16th, the CADJPY was our "Chart of the Day" (www.forexanalytix.com) and the pair was expected to develop the neckline of a possible longer term head and shoulder pattern. The pair did just that, but did a little more than expected. On that drop following August 16th, the pair fell to a low of the 84.67 level and bounced. The problem with this move is that created a "false breakdown" below the key 85.30 support and may have created a near term INVERSE head and shoulder pattern. If this pattern plays out we could rally towards the 88.50-89.00 level near term. With stocks at all time highs, the risk of a move higher from here is heightened. 
Long
by ForexAnalytix
USD CAD SELL (US DOLLAR - CANADIAN DOLLAR)CAD FUNDAMENTAL BIAS: BULLISH 1. The Monetary Policy outlook for the BoC At the July meeting the BoC confirmed market’s speculation that they will continue to scale back asset purchases by tapering QE with another C$1bln reduction per week. Even though the bank’s language and overall tone was in line with overall consensus, the reaction in the CAD suggests that some participants might have been expecting more from the bank in terms of a hawkish tilt. The bank also reiterated that there is particular uncertainty in their projections and stressed that the economic recovery requires extraordinary policy accommodation, which arguably is something the bulls wanted to see removed in the statement. 2. Commodity-linked currency with dependency on Oil exports Oil staged a massive recovery after hitting rock bottom in 2020. The move higher over the past few months has been driven by (1) supply & demand (OPEC’s production cuts); (2) improving global economic outlook and improving oil demand outlook (vaccines and monetary and fiscal stimulus induced recoveries); (3) rising inflation expectations (reflation). Even though further gains for Oil will arguably prove to be an uphill battle, the bias remains positive in the med-term as long as the current supportive factors and drivers remains intact. We will of course have short-term ebbs and flows as we’ve seen in recent weeks which could affect the CAD from an intermarket point of view, but as long as the med-term view for Oil remains higher that should be supportive for Petro-currencies like the CAD. 3. Developments surrounding the global risk outlook. As a high-beta currency, CAD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the CAD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the CAD in the med-term , but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 4. CFTC Analysis Latest CFTC data for the CAD (updated until 17 August) showed a positioning change of -3850 with a net non-commercial position of +2660. The CAD’s positioning has seen a substantial unwind in the past few weeks after the CAD got a bit frothy after the April BoC policy meeting where the bank took a substantial hawkish tilt. However, in the past few weeks a lot of the froth has been washed out and with the bias for the CAD still bullish in the med-term , the current positioning means we could see med-term buyers stepping back in gradually. The key risk of course this past week has been the deteriorating risk sentiment as well as the downside we saw in Oil , and until that reverses we want to be extra careful of the CAD in the short-term. USD FUNDAMENTAL BIAS: NEUTRAL 1. The global risk outlook Global economic data continues to surprise lower and should continue to struggle to surprise to the upside after the pandemic rebound. As the USD usually moves inversely to global growth that should be supportive for the USD. 2. The Monetary Policy outlook for the FED In July the FOMC noted that the economy has made progress toward their goals, and they’ll continue to assess progress in coming meetings. They also took a more sanguine view of the virus situation by removing prior comments that sectors affected by the pandemic ‘remain weak but have shown improvement’ and instead replaced it with ‘sectors most affected by the pandemic have shown improvement but have not fully recovered’. This was initially seen as less dovish, but Powell used his usual dovish tone to correct any ‘hawkish’ takes by stressing that employment still has a ‘ways to go’ and noted that there was still "some ground to cover" when it comes to the labour market. He also reiterated that any decision to announce tapering will be done well in advance. For now, markets are looking at the incoming data to decide whether tapering will be announced at the Jackson Hole Symposium or in the fall. This past week we some interesting comments from Fed’s Waller who tilted their language and stance towards Bullard and Kaplan in expecting that two more solid employment prints (800K-1M) would mean substantial further progress has been met and tapering could then start at a faster pace. This was bullish for the USD, but the more important and market moving comments came from Fed’s Clarida who has seemingly moved into the Neutral camp (previously dovish) by saying he agrees with the median Fed projections of a first hike by early 2023 and more importantly his comments about inflation has moved away from the sanguine view expressed by the doves and is more concerned about current price pressures. This shift saw Dollar upside with all eyes on the Sep NFP to see whether markets will expect Sep or Dec to be the official tapering announcement meeting. 3. Real Yields Despite recent divergence between the USD and US real yields, we still think further downside in real yields will be a struggle so close to new cycle lows and that probability is skewed higher from here given the outlook for growth, inflation and tapering and should support the USD. 4. Economic Data Retail sales came in below consensus but given the price action it was clear that majority of participants were looking for a much worse number following the colossal drop in the Univ Mich Sentiment report the week before. However, the USD was also supported by the jittery and risk off flows in the markets and was further aided by the Fed’s minutes which confirmed that the median view of the board has shifted towards earlier tapering. In the week ahead all eyes will be on the Jackson Hole Symposium to see whether the market gets an unofficial tapering announcement nod from Fed Chair Powell which if it happens will open up the possibility of an official announcement at the Sep meeting. 5. CFTC Analysis Latest CFTC data for the USD (updated until 17 August) showed a positioning change of -115 with a net non-commercial position of +19211. For now, with the fundamental outlook still neutral, and with positioning at current levels the incoming data will remain the key driver for the USD’s short-term volatility , with the Jackson Hole and GDP this week the main events to keep on the radar.
by thunderpips
1
USD CAD SELL (US DOLLAR - CANADIAN DOLLAR)CAD FUNDAMENTAL BIAS: BULLISH 1. The Monetary Policy outlook for the BoC At the July meeting the BoC confirmed market’s speculation that they will continue to scale back asset purchases by tapering QE with another C$1bln reduction per week. Even though the bank’s language and overall tone was in line with overall consensus, the reaction in the CAD suggests that some participants might have been expecting more from the bank in terms of a hawkish tilt. The bank also reiterated that there is particular uncertainty in their projections and stressed that the economic recovery requires extraordinary policy accommodation, which arguably is something the bulls wanted to see removed in the statement. 2. Commodity-linked currency with dependency on Oil exports Oil staged a massive recovery after hitting rock bottom in 2020. The move higher over the past few months has been driven by (1) supply & demand (OPEC’s production cuts); (2) improving global economic outlook and improving oil demand outlook (vaccines and monetary and fiscal stimulus induced recoveries); (3) rising inflation expectations (reflation). Even though further gains for Oil will arguably prove to be an uphill battle, the bias remains positive in the med-term as long as the current supportive factors and drivers remains intact. We will of course have short-term ebbs and flows as we’ve seen in recent weeks which could affect the CAD from an intermarket point of view, but as long as the med-term view for Oil remains higher that should be supportive for Petro-currencies like the CAD. 3. Developments surrounding the global risk outlook. As a high-beta currency, CAD has benefited from the market's improving risk outlook over recent months as participants moved out of safehavens and into riskier, higher-yielding assets. As a pro-cyclical currency, the CAD enjoyed upside alongside other cyclical assets going into what majority of market participants think was an early post-recession recovery phase. As long as expectations for the global economy remains positive the overall positive outlook for risk sentiment should be supportive for the CAD in the med-term, but the recent short-term jitters and risk off flows once again showed us why risk sentiment is also a very important short-term driver for the currency. 4. CFTC Analysis Latest CFTC data for the CAD (updated until 17 August) showed a positioning change of -3850 with a net non-commercial position of +2660. The CAD’s positioning has seen a substantial unwind in the past few weeks after the CAD got a bit frothy after the April BoC policy meeting where the bank took a substantial hawkish tilt. However, in the past few weeks a lot of the froth has been washed out and with the bias for the CAD still bullish in the med-term, the current positioning means we could see med-term buyers stepping back in gradually. The key risk of course this past week has been the deteriorating risk sentiment as well as the downside we saw in Oil, and until that reverses we want to be extra careful of the CAD in the short-term. USD FUNDAMENTAL BIAS: NEUTRAL 1. The global risk outlook Global economic data continues to surprise lower and should continue to struggle to surprise to the upside after the pandemic rebound. As the USD usually moves inversely to global growth that should be supportive for the USD. 2. The Monetary Policy outlook for the FED In July the FOMC noted that the economy has made progress toward their goals, and they’ll continue to assess progress in coming meetings. They also took a more sanguine view of the virus situation by removing prior comments that sectors affected by the pandemic ‘remain weak but have shown improvement’ and instead replaced it with ‘sectors most affected by the pandemic have shown improvement but have not fully recovered’. This was initially seen as less dovish, but Powell used his usual dovish tone to correct any ‘hawkish’ takes by stressing that employment still has a ‘ways to go’ and noted that there was still "some ground to cover" when it comes to the labour market. He also reiterated that any decision to announce tapering will be done well in advance. For now, markets are looking at the incoming data to decide whether tapering will be announced at the Jackson Hole Symposium or in the fall. This past week we some interesting comments from Fed’s Waller who tilted their language and stance towards Bullard and Kaplan in expecting that two more solid employment prints (800K-1M) would mean substantial further progress has been met and tapering could then start at a faster pace. This was bullish for the USD, but the more important and market moving comments came from Fed’s Clarida who has seemingly moved into the Neutral camp (previously dovish) by saying he agrees with the median Fed projections of a first hike by early 2023 and more importantly his comments about inflation has moved away from the sanguine view expressed by the doves and is more concerned about current price pressures. This shift saw Dollar upside with all eyes on the Sep NFP to see whether markets will expect Sep or Dec to be the official tapering announcement meeting. 3. Real Yields Despite recent divergence between the USD and US real yields, we still think further downside in real yields will be a struggle so close to new cycle lows and that probability is skewed higher from here given the outlook for growth, inflation and tapering and should support the USD. 4. Economic Data Retail sales came in below consensus but given the price action it was clear that majority of participants were looking for a much worse number following the colossal drop in the Univ Mich Sentiment report the week before. However, the USD was also supported by the jittery and risk off flows in the markets and was further aided by the Fed’s minutes which confirmed that the median view of the board has shifted towards earlier tapering. In the week ahead all eyes will be on the Jackson Hole Symposium to see whether the market gets an unofficial tapering announcement nod from Fed Chair Powell which if it happens will open up the possibility of an official announcement at the Sep meeting. 4. CFTC Analysis Latest CFTC data for the USD (updated until 17 August) showed a positioning change of -115 with a net non-commercial position of +19211. For now, with the fundamental outlook still neutral, and with positioning at current levels the incoming data will remain the key driver for the USD’s short-term volatility, with the Jackson Hole and GDP this week the main events to keep on the radar.
by thunderpips
1
USDCAD 1.24 Support Held, Targeting 1.28 Trend Analysis The main view of this trade idea is on the 4-Hour. The fx cross USDCAD held support around the 1.245 price level after hitting resistance from 1.28. This is a counter-trend move from the rally in USDCAD which appears to be exhausted. Expectations are for a rally towards the 1.28 price level, 2.4% away from the time of publishing. Technical Indicators The hypothesis in the price movements is supported by the RSI and KST technical indicators. The RSI was oversold for a brief moment as USDCAD attempted to break below 1.24. However, the oscillator quickly rebounded and is back above 50 at the time of publishing. Also, the KST just created a positive crossover, another bullish signal for USDCAD. Currently USDCAD is trading above its fractal moving average and is currently testing is short term (25-SMA) moving average. Expectations are that the fx cross consolidate around its medium term (75-SMA) before returning to 1.28. Recommendation The recommendation will be to go long at market. Stop loss will be set around the 1.24 price level and a target of 1.28. This produces a risk-reward ratio of 3.03. Disclaimer The views expressed are mine and do not represent the views of my employers and business partners. Persons acting on these recommendations are doing so at their own risk. These recommendations are not a solicitation to buy or to sell but are for purely discussion purposes. At the time publishing, I have a position in USDCAD .
Long
by Ceddy86
Upward Trend Channel in NZDCAD, Targeting 0.895 Upper BoundTrend Analysis The main view of this trade idea is on the 2-Hour chart. The Forex Cross NZDCAD is in an upward trend channel, and is forming a higher low around the 0.875 price level. Expectations are for a continuation of this trend channel in the medium term, with a higher high being made around the 0.895 price level, 1.81% away from current levels. Technical Indicators The technical indicators being used need to confirm the expected positive price movement in NZDCAD. At the time of publishing, NZDCAD is approaching a positive crossover on its short (25-SMA), medium (75-SMA) and fractal moving averages. Also, secondary positive confirmations in KST and RSI is being monitored, that is, a positive crossover in KST as well as the RSI crossing above 50. The occurrence of these positive crossovers will aid in the bullish thesis of NZDCAD. Recommendation The recommendation will be to go long at market. At the time of publishing NZDCAD is trading around 0.879. The medium-term target price is observed around the 0.895 price level, the top of the upward trend channel. A stop loss is set at 0.874. This produces a risk reward ratio of 2.31. Disclaimer The views expressed are mine and do not represent the views of my employers and business partners. Persons acting on these recommendations are doing so at their own risk. These recommendations are not a solicitation to buy or to sell but are for purely discussion purposes. At the time publishing, I have a position in NZDCAD.
Long
by Ceddy86
The dollar was choppy today...The dollar was choppy today and started the day lower but remains sub 92.00, whilst holding above the 91.60 support level in wake of a weak initial jobless claims print yet again this week at 411k, a similar pace to last week. CAD was a underperformer despite a partial recovery in Canadian manufacturing sales and failed to benefit from a later recovery bid in oil prices, with USD/CAD rising a fair bit into the 4pm BST London fix. For now, further upside to be expected on USD/CAD heading into tomorrows session.
Long
by FTUKcom
4