Analys från DailyFX
USD/CAD Technical Analysis: CAD Leaves Low-Vol G10 In Its Tracks
Can CAD strength continue? See our forecast to find out what is driving market trends!
Talking Points:
- USD/CAD technical strategy: remaining short below 1.3545 on closing basis
- Bank of Canada’s Wilkin’s Poloz scare CAD shorts on upbeat outlook
- Canadian Dollar Adds To Gains Ahead of Central Bank Filled Week
The emerging Canadian Dollar strength caught a lot of traders off guard this week. For one, in a low volatility environment, a strong move tends to lack follow-through. CAD strengthened impressively on Friday after an employment report that featured a 77k increase in full-time jobs vs. an expected 15k increase.
The real shot in the arm to the Canadian dollar that allowed it to build on Friday’s gains came off the back of comments from Bank of Canada’s Sr. Deputy Governor, Carolyn Wilkin’s provided a handful of encouraging notes about the Canadian economy that were echoed by Governor Stephen Poloz on Tuesday morning. Wilkins stated that the Bank of Canada was able to get ahead of the Oil price declines effect on the economy with rate cuts from years ago and that they see Q1 growth at an impressive rate with broadening growth. On Tuesday, Governor Poloz shared that they are encouraged by economic growth that is both broadening and gaining momentum, and he added that recent BoC easing actions have “done their job.”
The Canadian Dollar strength was also seen via the positively correlated 2-yr Canadian sovereign yields, which rose by more than 8pbs or ~11%. These supportive comments from the Bank of Canada members came at a good time as leveraged institutions per the CFTC’s Commitment of Traders report in the week ended June 6 cut their short positions on CAD futures by ~1,100.
Since trading near 1.3550 before Friday’s Canadian employment report, the Canadian dollar has strengthened by 300 pips against the USD and 750 pips against the vulnerable British Pound. As mentioned earlier, the low volatility environment discourages chasing breakouts. However, a break and close below the channel on the chart below that aligns with the April low at 1.3216 is likely indicative of a behavioral shift in the Canadian Dollar that would favor more structural medium-term strength. The first focus on a significant break from the long-term rising channel would be the 2017 low at 1.2970.
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Chart Created by Tyler Yell, CMT
USD/CAD Insight from IG Client Positioning
The sentiment highlight section is designed to help you see how DailyFX utilizes the insights derived from IG Client Sentiment, and how client positioning can lead to trade ideas. If you have any questions on this indicator, you are welcome to reach out to the author of this article with questions at tyell@dailyfx.com.
USDCAD: Retail trader data shows 61.0% of traders are net-long with the ratio of traders long to short at 1.57 to 1. The number of traders net-long is 11.3% higher than yesterday and 8.3% higher from last week, while the number of traders net-short is 16.6% lower than yesterday and 35.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests USDCAD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger USDCAD-bearish contrarian trading bias.(Emphasis mine)
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Shorter-Term USD/CAD Technical Levels: Tuesday, June 13, 2017
For those interested in shorter-term levels of focus than the ones above, these levels signal important potential pivot levels over the next 48-hours.
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What’s inside:
- EURUSD broke the ‘neckline’ of a bearish ‘head-and-shoulders’ pattern, April trend-line
- Resistance in vicinity of 11825/80 likely to keep a lid on further strength
- Targeting the low to mid-11600s with more selling
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Coming into last week we pointed out the likelihood of finally seeing a resolution of the range EURUSD had been stuck in for the past few weeks, and one of the outcomes we made note of as a possibility was for the triggering of a ’head-and-shoulders’ pattern. Indeed, we saw a break of the ’neckline’ along with a drop below the April trend-line. This led to decent selling before a minor bounce took shape during the latter part of last week.
Looking ahead to next week the euro is set up for further losses as the path of least resistance has turned lower. Looking to a capper on any further strength there is resistance in the 11825-11880 area (old support becomes new resistance). As long as the euro stays below this area a downward bias will remain firmly intact.
Looking lower towards support eyes will be on the August low at 11662 and the 2016 high of 11616, of which the latter just happens to align almost precisely with the measured move target of the ‘head-and-shoulders’ pattern (determined by subtracting the height of the pattern from the neckline).
Bottom line: Shorts look set to have the upperhand as a fresh month gets underway as long as the euro remains capped by resistance. On weakness, we’ll be watching how the euro responds to a drop into support levels.
For a longer-term outlook on EURUSD, check out the just released Q4 Forecast.
EURUSD: Daily
—Written by Paul Robinson, Market Analyst
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You can follow Paul on Twitter at@PaulRobinonFX.
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
EURUSD: Retail trader data shows 37.3% of traders are net-long with the ratio of traders short to long at 1.68 to 1. In fact, traders have remained net-short since Apr 18 when EURUSD traded near 1.07831; price has moved 9.6% higher since then. The number of traders net-long is 15.4% lower than yesterday and 16.4% higher from last week, while the number of traders net-short is 0.4% higher than yesterday and 10.5% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests EURUSD prices may continue to rise. Positioning is more net-short than yesterday but less net-short from last week. The combination of current sentiment and recent changes gives us a further mixed EURUSD trading bias.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
Why and how do we use IG Client Sentiment in trading? See our guide and real-time data.
GBPUSD: Retail trader data shows 38.2% of traders are net-long with the ratio of traders short to long at 1.62 to 1. In fact, traders have remained net-short since Sep 05 when GBPUSD traded near 1.29615; price has moved 3.4% higher since then. The number of traders net-long is 0.1% higher than yesterday and 13.4% higher from last week, while the number of traders net-short is 10.6% lower than yesterday and 18.3% lower from last week.
We typically take a contrarian view to crowd sentiment, and the fact traders are net-short suggests GBPUSD prices may continue to rise. Yet traders are less net-short than yesterday and compared with last week. Recent changes in sentiment warn that the current GBPUSD price trend may soon reverse lower despite the fact traders remain net-short.
— Written by Christopher Vecchio, CFA, Senior Currency Strategist
To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com
Follow him on Twitter at @CVecchioFX
To be added to Christopher’s e-mail distribution list, please fill out this form
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