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Thread: USD/CADís trend and take the pair below the 20-day SMA

  1. #1
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    Default USD/CADís trend and take the pair below the 20-day SMA

    The New Zealand dollar found a bottom last week courtesy of stronger inflation data. Consumer prices grew 0.4% in the second quarter and while this is a slower pace of growth than Q1, on an annualized basis, price pressures picked up significantly from 1.1% to 1.5%. Thereís been recent speculation that the Reserve Bank could cut interest rates especially after reports of softer manufacturing and service sector activity, but with inflation on the rise, thereís no urgency to act. Still, New Zealandís economy faces severe pressures that should prevent a meaningful currency recovery. Dairy prices fell 5 out the last 6 auctions and they havenít seen a material increase since February. China, New Zealandís most important trade partner, is also experiencing slower growth with future potential squeezed by trade tensions. When the RBNZ last met, they said rates would remain at 1.75% ďfor now,Ē adding that they could be increased or decreased as necessary. On a technical basis, the 3-week long consolidation above 67 cents suggests a near-term bottom but we expect any recovery to be limited to 69 and at most 70 cents because this weekís trade balance will most likely reinforce the softer data trend.

    Last but not least, there has been quite a bit of volatility in the Canadian dollar. Falling oil prices took the Canadian dollar lower initially but Fridayís retail sales and consumer price reports reminded everyone of why the Bank of Canada chose to raise interest rates last week. Consumer spending is strong and inflation is on the rise with the annualized pace of CPI growth hitting 2.5% in June, the highest level since February 2012. Retail sales rose by the strongest amount since January 2017. These data improvements were enough to reverse USD/CADís trend and take the pair below the 20-day SMA. Is close to 100 usd to cad at 130 lonnie. With no major Canadian economic reports on the calendar this week, the loonie may continue to ride on the coattails of these reports and fall to 1.30.
    All is possible

  2. #2
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    Hello Sir. Interesting topic, I think that USD/CAD is great pair for trading in forex in this momments

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