USD/CAD: Trading Scenarios

Statistics Canada reported last week that 53,700 new jobs were created in September (the forecast was +10,000), while unemployment fell by 0.2% to 5.5%, which roughly corresponds to 40-year lows.

Employment indicators may give the Bank of Canada reasons not to change the interest rate on October 30, when the bank meeting takes place.

After the publication of strong data from the country's labor market, the Canadian dollar strengthened sharply, while the USD / CAD pair fell by about 90 points to 1.3200.

However, the ongoing US-China trade war is putting pressure on both the US economy and the economies of other countries. Commodity currencies quotes, such as New Zealand, Australian and Canadian dollars, also suffer from this. The US dollar, in this situation, retains the status of an asset-refuge, since the American economy still looks more stable in the context of ongoing trade wars.

At the beginning of today’s European session, USD / CAD is trading just above the closing price last Friday, near 1.3216.

A break into the zone above the resistance levels of 1.3250 (ЕМА200 on the daily chart), 1.3260 (ЕМА200 on the 4-hour chart) will resume the bullish USD / CAD trend and direct the pair towards recent local maximums near the resistance level 1.3345 and the upper border of the ascending channel on the daily chart, which currently runs between resistance levels 1.3345 and 1.3380.

The long-term positive dynamics of the US dollar and, accordingly, the pair USD / CAD remain.

In an alternative scenario, a breakdown of the local support level of 1.3170 will speak in favor of a further decline. The objectives of the decline are the support levels of 1.3138 (September lows), 1.3100, 1.3050 (EMA144 on the weekly chart), 1.2920 (EMA200 on the weekly chart).

Volatility in the USD / CAD pair may rise sharply today at 12:30 (GMT), when important macro data for the USA and Canada will be published.

According to the forecast for September, it is expected that the consumer price index in Canada will come out with a value of +2.1%, which is likely to support CAD. Core CPI is expected to increase by +1.9% in September.

At the same time, retail sales, the main indicator of US consumer spending, showing changes in retail sales, grew in September, as expected, by +0.3% (after growing by +0.4% in August).

A slight increase in values is unlikely to accelerate the growth of the dollar. Data worse than forecast will negatively affect the US dollar in the short term.

Support Levels: 1.3200, 1.3172, 1.3138, 1.3050, 1.2920

Resistance Levels: 1.3250, 1.3260, 1.3300, 1.3345, 1.3380, 1.3435, 1.3452, 1.3465, 1.3520, 1.3560, 1.3600, 1.3660

Trading Scenarios

Sell ​​Stop 1.3170. Stop-Loss 1.3270. Take-Profit 1.3138, 1.3050, 1.2920

Buy Stop 1.3270. Stop-Loss 1.3170. Take-Profit 1.3300, 1.3345, 1.3380, 1.3435, 1.3452, 1.3465, 1.3520


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