USD/CAD Forecast: Loonie Power Continues Submit-Election

USD/CAD Evaluation

• Softwood lumber tariff discount may have a systemic impact.
• Oil costs favor additional draw back on USD/CAD.
• Canadian GDP information scheduled subsequent week.

MULTIPLE FUNDAMENTAL FACTORS SUPPORTING CAD

Submit-US election, the Canadian Greenback (CAD) has gained roughly 2.75% in opposition to the US Greenback. This comes on the again of expectation round eased commerce duties which have been elevated in the course of the Trump administration. As of this week, this expectation has now develop into actuality with the U.S. Division of Commerce setting a brand new responsibility charge of 8.9% on common for softwood lumber imports from Canada – beforehand 20.2%. Whereas this can be a step in the best route from a Canadian perspective, the Canadian worldwide commerce minister Mary Ng is looking for additional discount as they’re deemed “unwarranted and unfair”. The softwood lumber tariff lower might be an indication of additional cuts throughout different industries reminiscent of metal and aluminum which may have constructive implications for the native forex.

Oil (a main Canadian export) worth resurgence has mirrored positively for the loonie because the forex is understood for its historic constructive correlation with oil. As COVID-19 vaccines are gaining in effectiveness (%), markets are expectant of upcoming financial revivals and commerce that are reflective in markets reminiscent of oil. This bodes effectively for the Canadian Greenback (long-term) as oil is more likely to proceed its rise as soon as vaccines are finalized and distributed.

Additional your information on oil and the significance it performs in monetary markets with Eight Stunning Crude Oil Info Each Dealer Ought to Know

Hold updated with worth motion setups!

Dealer’s Toolbox: The best way to Establish Value Developments with Dealer Sentiment

Register for webinar

Be part of now

Webinar has ended

USD/CAD: DAILY CHART

Chart ready by Warren Venketas, IG

USD/CAD is buying and selling firmly between the 1.3057 (61.8% Fibonacci degree) and 1.2928 assist swing low on November 9, 2020. The Relative Power Indicator (RSI) is regularly approaching oversold territory which can imply an extension of the latest downward transfer. Preliminary assist would come from the 1.2928 swing low. A break under may result in additional draw back with the earlier low (1.2782) monitoring again to 1 October, 2018.

There may be additionally an opportunity that the 1.2928 assist holds agency and is then adopted by a transfer increased in the direction of resistance at 1.3057.

HIGH IMPACT EVENTS SCHEDULED FOR USD/CAD

The financial calendar has no additional excessive impression occasions this week however subsequent week may present important worth volatility on the USD/CAD pair ought to Canadian GDP deviate considerably from estimates. Q3 figures are anticipated to be markedly increased than Q2 with eased lockdown restrictions and authorities assist.

Supply: DailyFX Financial Calendar

USD/CAD STRATEGY MOVING FORWARD

USD/CAD has been buying and selling with a longtime short-term downward bias which might be sustained main as much as the Canadian GDP announcement subsequent week. Optimistic GDP information could complement additional downward strain which may result in multi-year lows.

Key factors to think about:

• 61.8% Fibonacci degree – 1.3057
• Technical indicators – RSI oversold territory
• Oil worth
• Upcoming Canadian financial information
• IGCS information

IG CLIENT SENTIMENT DATA REVEALS POTENTIAL FOR FURTHER DOWNSIDE

IGCS exhibits retail merchants are presently prominently lengthy on USD/CAD, with 75% of merchants presently holding lengthy positions (as of this writing). At DailyFX we usually take a contrarian view to crowd sentiment, and the actual fact merchants are net-long is suggestive of a sustained bearish outlook nevertheless, with the next web change in brief positions relative to lengthy positions by retail merchants, the outlook is of a combined disposition.

— Written by Warren Venketas for DailyFX.com

Contact and observe Warren on Twitter: @WVenketas