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USD-CAD to Sell

Usd-Cad, usdcad, us dollar, canadian dollar, usd, cad

Usd-Cad, usdcad, us dollar, canadian dollar, usd, cadParticularly interesting USD-CAD, which after have reached its lowest of the year due by the two Bank of Canada rate hikes, it has rebounded by about 50% of Fibonacci from the peak of 1,3792 touched on May 5.

It is now back to the level of the first rise of the Canadian rate, and a falling of the pair is very likely. Not only from a technical point of view but, above all, fundamental.

Economic activity in Canada has continued to grow rapidly in the second quarter of 2017, exceeding expectations at the time of the July Report. Growth continued to be broadly based on regions and industries. Consumption and residential investment were robust, and growth in exports and business investment picked up.

The level of economic activity will be supported by rising foreign demand and the recent firming of commodity prices, still-accommodative monetary and financial conditions, and public infrastructure spending.

Economic growth in the United States rebounded in the second quarter, as anticipated in the July Report. Consumption growth improved after a weak first quarter. Business investment growth remained robust, supported by, but not limited to, the ongoing recovery in energy investment (Chart 2). In contrast, residential investment contracted following two-quarters of strong growth, as spending on renovations and commissions on sales of existing homes declined.

The outlook for economic growth for the second half of 2017 is roughly unchanged from July. The recent hurricanes had a devastating impact on affected communities, with significant albeit transitory aggregate economic effects. Consumption, housing and business investment are likely to be negatively affected, resulting in a lower outlook for growth in gross domestic product (GDP) in the third quarter. Recovery and reconstruction efforts are expected to provide a modest boost to economic activity starting in the fourth quarter.

usd-cad, usdcad, usd, cad, us dollar, canadian dollar

 

If we now take the chart (above), we can see how USD-CAD has returned, as already mentioned, to the level of the first rate rise by the Bank of Canada. Here it stopped its strong rebound and now there is a good probability that he may resume his downfall.

So, both for a Canadian economy that is growing at the moment more than the American one, also helped by rising crude oil, both because the USD-CAD has returned to the level of the first of the two Canadian rate hikes (above which, we would enter into an area of excess of price), and because a very likely third rise in the rate in the United States in December has already been priced in by the financial markets, a short entry on USD-CAD is plausible with a first target level, at 1.24500 areas and second at 1.20000 areas. Stop loss at 1.30500. Size of position to open based on your money management (position size).

If you are interested in Forex market you can read other articles and analyses, and all the last Central Banks reports. You can learn more about the Fundamental Analysis in Forex with my e-Book.

 

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