Oct 20, 2022

VOT Research Desk

Despite high US Treasury yields and anticipation that the Fed would raise rates by a higher amount at its meeting in November, the USD/CAD fell precipitously from about 1.3800 as the US Dollar fell versus most G8 currencies.

Investors also applauded a risk-on attitude sparked by China’s decision to reduce the quarantine for new arrivals since US stocks are now trading higher.

The USD/CAD exchange rate is 1.3695 at the time of writing.

In Canada, the September inflation data released on Wednesday surprised to the upside, rising 6.9% YoY, over projections of 6.7%. As a result, market investors increased their expectations for future rate rises from the Bank of Canada, with a 75 bps increase for the next meeting completely priced in.

The USD/CAD pared some of its gains after the announcement. However, positioning ahead of the BoC meeting the following week supported the Loonie throughout Thursday’s session, as the USD/CAD fell further to the 20-DMA. According to TD Securities analysts, the BoC will raise rates by 75 basis points.

The Bank has grown more concerned with the inflation backdrop and potential for long-term inflation expectations to become unanchored, they said, adding that the data did not show a change in the trend of inflation. As a result, a 75bp shift should occur the following week.

Oct, 11 2022

VOT Research Desk

By overcoming 1.3832, the USD/CAD rise restarted, and the intraday bias is now upward. Aim for the current uptrend’s 161.8% estimate of 1.2005 to 1.2947 from 1.2401 at 1.3925.

A decisive break there will aim for the 1.4285 200% forecast. Below the modest support level of 1.3701 on the downside, the intraday bias will initially become neutral.

However in the event of a pullback, the picture will remain optimistic so long as the 1.3501 support holds.

Overall, the upward trend from the low point in 2021 (1.2005) is still in effect. Considering the present impulsive momentum, the long-term upward trend from 0.9056 may be resumed (2007 low).

Whatever the case, the next move should be a retest of the 2016 high at 1.4689. As long as resistance turned support at 1.3222 holds, this will continue to be the preferred scenario.

Oct 10, 2022

VOT Research Desk

The USD/CAD pair retreats a few pips from a one-week high reached earlier this Monday after failing to take advantage of its minor intraday rise. However, spot prices are able to maintain firmly above the 1.3700 level and continue to be strongly supported by a number of reasons.

The recent hawkish comments made by a number of Fed members and Friday’s positive US monthly employment data, which demonstrated the economy’s resiliency, both confirmed the bets. In addition, the existing risk-off atmosphere favors the safe-haven dollar and the likelihood of further advances for the USD/CAD pair.

Nevertheless, the comparatively low trading activity following a bank holiday in the US and Canada may discourage traders from making risky wagers. Before the FOMC minutes, WE consumer inflation data, and WE retail sales data are released this week, investors could also wish to take a break.

The USD/CAD pair is ready to strive for the 1.3800 round-figure level and retest the YTD top, which was hit last week in the 1.3835–1.3834 range. As a result, any significant downturn may still be viewed as a buying opportunity and is more likely to be temporary in nature.

Sep 28, 2022, 10:00PM+7:00

VOT Research Desk

Analytical Viewpoint

Daily Pivots: (S1) 1.3651; (P) 1.3713; (R1) 1.3787; 

For the time being, the USD/CAD intraday bias is still positive. The current rally should aim for a 161.8% projection, which would take it from 1.2401 to 1.2947.

 A strong break there will aim for the 1.4285 200% forecast. Below the modest support level of 1.3638, the intraday bias will change to neutral and consolidations will come first before staging another rebound.

Overall, the upward trend from the low point in 2021 (1.2005) is still in effect. Considering the current impulsive momentum, the long-term upward trend from 0.9056 may be resumed (2007 low).

Whatever the case, the next move should be a retest of the 2016 high at 1.4689. As long as resistance turned support at 1.3222 holds, this will continue to be the preferred scenario.