Technical Analysis USD/CAD : 2019-07-24

Weak macroeconomic data was released in Canada

Weak macroeconomic data had a negative effect on Canadian dollar rate. Will the correction of its quotations continue?

On the chart, the weakening of the Canadian dollar looks like a growth in quotations. Wholesale trade in Canada declined by 1.8% in May after a continuous increase over the previous 5 months. The ratio of wholesale stocks to sales (inventory-to-sales) has peaked since 1995. Canadian retail trade also unexpectedly declined in May by 0.1%, while the forecast was + 0.3%. All this may be a sign of a slowdown in the Canadian economy and encourage the Bank of Canada to lower the rate this year. Now it is 1.75% and has been at this level since October 2018. On July 31, 2019, GDP data for May are released in Canada, and on August 2, the trade balance for June. It can affect the dynamics of the Canadian dollar. The next meeting of the Bank of Canada will not take place soon – on September 4.

USDCAD D1 Chart

USDCAD D1 Chart

On the daily timeframe USDCAD: D1 is in a neutral trend. Various technical analysis indicators have generated uptrend signals. Correction to the top and further growth of quotations is possible in case of a decrease in the rate of the Central Bank of Canada.

  • The Parabolic indicator shows a signal to increase.
  • The Bolinger bands is narrowing indicating volatility decrease.
  • The RSI indicator is above the 50 mark. It has formed a divergence to increase.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop if USD/CAD exceeds its last maximum: 1,317. This level can be used as an entry point. The initial stop lose may be placed below the two last lower fractals and the Parabolic signal: 1.3. After the opening the pending order, stop shall be moves following the signals of Bollinger and Parabolic to the next fractal minimum. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place a stop-loss moving it in the direction of the trade. If the price meets the stop level (1,3) without reaching the order (1,317), we recommend to cancel the order: the market sustains internal changes that were not taken into account.

Technical Analysis Summary

Position Buy Buy stop Above 1,317 Stop loss Below 1,3

Market Overview

Equities gain on trade talks resumption hopes

Dollar advances despite weak home sales data

US stock market advance accelerated on Tuesday in anticipation of China trade talks resumption next week and positive corporate reports. The rose 0.7% to 3005.0. Jones industrial advanced 0.7% to 27349 led by 6.1% gain in Cocoa Cola. The Nasdaq gained 0.6% to 8251. The dollar strengthening accelerated despite steeper than expected 1.7% decline on month in existing home sales in June instead of forecast 0.4%: the live dollar index data show the ICE (NYSE:) , a measure of the dollar’s strength against a basket of six rival currencies, gained 0.4% to 97.7 and is higher currently. Stock index futures point to lower market openings today

DAX 30 leads European indexes gains

European stocks resumed advancing on Tuesday supported by strong earnings reports. The and slump accelerated with euro lower while pound rising currently. The ended 1% higher led by auto and chip maker shares. The German 30 rallied 1.6% to 1249.74. France’s rose 0.9%. UK’s advanced 0.6% to 7556.86.

Australia’s All Ordinaries Index paces Asian indexes gains

Asian stock indices extending gains today ahead of US delegation visit to Shanghai next week. advanced 0.4% to 21709.57 despite yen inching higher against the dollar. Chinese stocks are rising: the is up 0.6% and Hong Kong’s is 0.6% higher. Australia’s All Ordinaries Index gained 0.8% with Australian dollar’s slide against the greenback intact.

AU200 D1 Chart

AU200 D1 Chart

Brent down ahead of US inventories report

Brent futures prices are edging lower today. The American Petroleum Institute late Tuesday report indicated US crude inventories fell by 11 million barrels last week. Prices rose yesterday: September Brent gained 0.9% to $63.83 a barrel on Tuesday. Today at 16:30 CET the Energy Information Administration will release US Inventories.