While other brokers such as SEB and SwissQuote recommend clients to look short USD/CAD, UBS has taken a different view noting USD/CAD “remains stuck right in the middle of the recent trading range. We expect the range play to continue. Sell rallies to 1.2570 with stops above 1.2670 and buy on dips to 1.24 with stops below 1.23″.
SwissQuote report to clients that the “USD/CAD has seen a pickup in buying interest near the key support area between 1.2352 and 1.2314. However, the succession of lower highs remains thus far intact. Hourly resistances can
now be found at 1.2566 (02/03/2015 high) and 1.2664. An hourly support lies at 1.2449 (27/02/2015 low).
In the longer term, the technical structure looks like a rounding bottom whose maximum upside potential is given by the strong resistance at 1.3065 (09/03/2009 high). The recent weakness is seen as a medium-term corrective phase. Key supports stand at 1.2314 (22/01/2015 low) and 1.2047 (intraday low)”.
Buy limit 2 units at 1.2363, Obj: Close unit 1 at 1.2646, remaining at 1.2950, Stop: 1.2290
SEB is recommending to clients to buy USD/CAD on dips. They report “the Loonie is vulnerable to additional Bank of Canada (BOC) rate cuts and continued weak oil prices in H1 2015. We expect unchanged rates at tomorrow’s central bank meeting. We would look to buy on a dip in USD/CAD. An April rate reduction looks increasingly likely. We forecast USD/CAD at 1.30 in Q2 2015″.
Buy USD/CAD on dips below 1.24 as BOC is likely to remain on hold this week.
As the markets open in the US on Friday morning, we will get the latest Canadian inflation data reported out of the nation.
Capital Trust Markets reports “the Canadian dollar gained strength during today’s session on the back of better-than-expected wholesale sales data, and markets will be looking for strong inflation figures to reinforce the data and compound the bullish momentum. With this in mind, what’s expected and how can we set up to profit from a release either side of the consensus forecast? Here is what you need to know.
First, what did the wholesale sales data tell us about the Canadian economy? The data – reported at 1.8% growth versus a forecast of 0.7% – comes amid a spate of strong releases this month. Manufacturing sales beat expectations of 2.1% at the end of last week, while unemployment throughout October dipped to 6.5% with employment rising 43.1 K, and building permits reported at the beginning of the month expanding by 12.7% month over month during September. This being said, there are some concerns about deceleration in the house price growth over the last few months, and this is likely to force the bank of Canada to hold interest rates at their current lows so as to avoid jeopardizing any sustainable growth over the coming quarters. With this in mind, what of levels to keep an eye on in the USDCAD? Take a look at the chart below.
As the chart shows, we have seen a certain amount of consolidation in the pair over the past few weeks. However, we could see this consolidation come to an end and the US dollar resume its upside momentum versus its Canadian counterpart, as we approach a combination of key level and 200 SMA support. 1.1266 and 1.1464 are the levels to keep an eye on. Consensus forecasts the upcoming core CPI data (MoM) – the likely headliner – at 0.2% for October. With this in mind, look for anything below to reinforce aforementioned support and validate 1.1464 medium-term to the upside”.
Capital Trust Markets reports “the US Dollar (USD) extended downside movement against the Canadian Dollar (CAD) on Wednesday, dragging the price of USDCAD to less than 1.1350 following the emergence of a bearish pin bar on the weekly timeframe. The long term bias however remains bullish due to Higher High on the daily chart.
As of this writing, USDCAD is being traded around 1.1345. A hurdle can be seen near 1.1465, the swing high of the bearish pin bar as demonstrated in the following daily chart. A break and daily closing above the 1.1461 resistance area could incite renewed buying interest, validating a fresh rally above the 1.1500 handle.
On the downside, the pair is expected to find a support around 1.1310, the 23.6% fib level ahead of 1.1215, the 38.2% fib level and then 1.1138, the 50% fib level as demonstrated in the above chart. The bias will remain bullish as long as the 1.1300 support area is intact.
The US Dollar came under a renewed selling pressure yesterday as many of the oversold currencies and commodities pulled back, halting the record breaking winning streak by the US Dollar. The correction phase might continue in the coming days since many pairs are currently being pulled back from the key levels.
Keeping in view the overall technical and fundamental outlook, selling the USDCAD pair around the current levels appears to be a good strategy in short to medium term. The trade should however be stopped out on a daily closing above the 1.1465 resistance area”.
Capital Trust Markets reports “CAD/JPY stayed bullish even through a major downswing from 99.81 down to 92.89, respecting a higher high – higher low swing configuration. This allowed the pair to bounce back and we are now seeing traders eye a fresh multi-year Higher High.
Apparently there is nothing that can stop CAD/JPY from rallying even higher. Last week price closed above 101.04, where many were expecting some kind of temporary correction off 2013’s high. A bounce failed to materialize and buying momentum simply ate through all the sell orders placed in this area. On Tuesday the Japanese Yen tripped even lower on disappointing data, allowing a strong rally +120 pip rally. This helped the pair consolidate above resistance, paving the way for future gains as the pair enters uncharted territory since 2008.
Stochastic is showing overbought conditions on all timeframes from 4H all the way up to Monthly. This suggests a major correction is around the corner, however with price action heavily skewered towards fresh gains, we will stick to long positions until a bearish signal appears.
Towards the downside, albeit already at a decent distance, 101.04 is the primary support level to be watched. A return below this level should warn traders of deeper correction potential, while a bounce will suggest uptrend continuation”.
Capital Trust Markets reports “bearish technical signals are starting to add up, favoring a correction lower for CAD/JPY following a 830 pip upswing. More confirmations are needed, although a speculative short position at current levels could result in a large R:R if the double top chart pattern plays out right.
CAD/JPY buyers are finally reacting to a resistance level for the first time in three weeks. Spot is currently trading at 100.40 during 6th/11 U.S. session, down from a high of 101.20 reached during Asian trading. Based on overbought conditions and a negative RSI divergence showing on the Weekly chart, this rejection could lead to a temporary consolidation phase or a deeper correction in the coming days and weeks. This, of course, depends on price stabilizing below 101.04.
On the 4H chart we can spot a double top reversal pattern in the incipient phases. Today’s top was confirmed by a bearish engulfing bar, which helps determine risk for a potential short entry. Since there was little to no follow-up in intraday trading, we propose initiating short positions on a break below the major psychological handle of 100.00. Such a break would immediately target 99.27, CAD/JPY’s most recent Higher Low. As the chart clearly shows, a secondary support target is located at 97.70, only if price manages to invalidate the Higher Low swing structure with a break below 99.25.
On the other hand, if CAD/JPY rallies and ultimately stabilizes above 101.04/20, buying momentum could lift the pair up to 104.00 within a very short period of time, with long-term targets extending as high as 107.50″.
Capital Trust Markets reports “USD/CAD uptrend continues to accelerate despite a ballooning U.S. trade deficit, underlining investors’ confidence in the greenback.
A fresh Higher High is being pursued by USD/CAD bulls now that price has successfully rallied above 15thOctober high at 1.1384. Only last week price broke above the resistance of a bearish channel (temporary consolidation in the shape of flag pattern on Daily timeframe), and in less than three days the pair has successfully recovered all losses from previous weeks. This solidifies the uptrend configuration while paving the way for more gains in the near future.
Spot is currently trading at 1.1405, stabilizing above last month’s resistance. Although buying pressure is showing no signs of decreasing, overbought conditions are likely to take their toll soon. We expect rallies to continue towards 1.4160/70, with a possible dip soon afterwards in order to re-test 1.1382 and confirm this level as support.
Long term targets towards the upside include 1.1600, currently the resistance of a bullish channel dating back to 2012, with an even larger target at 1.1750, where a multi-year price pivot zone should be the ultimate target for long-term buyers”.
After two weeks defined predominantly by large rallies Capital Trust Markets reports “CAD/JPY has finally reached a crucial resistance level that will probably set the overall direction for the first half of November.
Half way through the 30th/10 U.S. session, CAD/JPY spot is currently trading around 97.70 as buyers test a major price pivot zone. From a technical perspective this rally appeared likely to exhaust on the first resistance touch based on the size of previous bullish swings. Stochastic has already entered overbought territory on Daily, indicating a temporary top followed by a correction should materialize in the near future. That being said, price action has to confirm this view in the end.
CAD/JPY respects a configuration of higher lows and higher highs on 4H timeframe and a steep trendline offers support at 96.75/85, with a secondary support cluster formed around 95.80 (38.2% Fib, 50 & 100 Moving Averages on 4Hour and a small pivot zone). These targets should only be considered in case of a strong bearish rejection from this 97.70/90.
On the other hand, for a solid uptrend continuation, CAD/JPY buyers should patiently wait for price to stabilize above 97.70 and for a second confirmation in the form of a re-test followed by a bullish rejection. Only then higher resistance levels around 99.10 – 100.00 should be considered as proper targets for the immediate future”.
Societe Generale report “EUR/USD is likely to stay down as the front end of the UST curve reprices from low levels. However, reserve managers et al still need to offload considerable amounts of EUR treasuries, cash, short term paper into longer dated UST. This combines with an equity market digesting the news means that most of the move is one in the USD and front end UST as the Fed path is repriced. EM which had done well pre-Fed meeting should still benefit eventually from a sense that the US economy is recovery. There the wealth effect of a recovering US economy will eventually come through trumping the subsitutiton effect (Fed tightening). EUR/USD will have no such luck as it is all driven by substitution. USDCAD there is an inbetween case between EM and EURUSD”.