The Canadian Dollar’s Recent Performance
The Canadian Dollar (CAD) has experienced a slight recovery after several weeks of consistent declines against the US Dollar. Despite this uptick, the CAD has not shown significant strength to initiate a new bullish trend. Over the past three weeks, the CAD has depreciated by over 3% against the Greenback since reaching a recent peak in mid-September.
Market Analysis:
- The Bank of Canada (BoC) is expected to reduce interest rates by 50 basis points in the upcoming week, further weakening the CAD.
- Recent economic data, such as the Canadian Consumer Price Index (CPI) inflation figures, have not provided substantial support for the CAD. While headline inflation decreased, core BoC-measured inflation saw a slight increase.
- In September, Canadian Housing Starts rose to 223.8K on a seasonally-adjusted basis, slightly below the forecast of 237.5K.
- Canadian Manufacturing Sales in August surpassed expectations but still contracted by 1.3%. Despite the positive outcome, markets anticipated a more significant decline of -1.5% or worse.
Canadian Dollar Price Forecast
Looking at the USD/CAD daily chart, the pair has shown signs of slowing down after surpassing the key resistance level of 1.3750. While the price briefly touched 1.3800, recent movements suggest a minor pullback, indicating a possible pause in bullish momentum. However, the pair remains above the 50-day EMA at 1.3624 and the 200-day EMA at 1.3610, indicating the continuation of the overall bullish trend.
The MACD indicator is still in positive territory, with the MACD line above the signal line. However, the histogram’s flattening suggests a potential decrease in bullish momentum. Traders should monitor any fundamental catalysts that could influence the USD/CAD pair’s direction, as a break above 1.3800 would confirm further upside, while a drop below 1.3650 could lead to increased selling pressure.
Canadian Dollar FAQs
Key Factors Impacting the Canadian Dollar:
- The Bank of Canada (BoC) plays a crucial role in setting interest rates, influencing the CAD’s value.
- The price of Oil, Canada’s major export, directly affects the CAD’s performance.
- Inflation, trade balance, and economic indicators also impact the CAD’s value.
Understanding these factors can provide insight into the Canadian Dollar’s movements and help investors make informed decisions.