Analys från DailyFX
USD/CAD in Focus Ahead of Canada CPI data as Oil Prices Rise
Talking Points:
– USD/CAD finding support around 1.30 following four days of consecutive declines
– Canada CPI figures headline the economic calendar today
– “Fed-speak” and Baker Hughes also on the docket for potential influences
The USD/CAD found some support around the big 1.30 figure following four days of consecutive declines, as the Fed opted to keep monetary policy unchanged and Crude Oil prices gained in recent days.
Looking ahead, Canada CPI data headlines the economic docket but “Fed-speak” and Baker Hughes are also in focus.
Against this backdrop we will form our outlook and look to find short term trading opportunities using different tools such as the Grid Sight Index (GSI) indicator.
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Canada August CPI readings are set to hit the wires 12:30 GMT. Headline CPI is expected to pick up for a 1.4% year-on-year number, while Core CPI is anticipated to downtick for an annualized 2.0%.
In their last policy press release, the BOC said “risks to the profile for inflation have tilted somewhat to the downside since July”, which seemed to have nudged to market to a slightly more dovish perception of the central bank’s outlook.
This might imply that the market could be more sensitive to an upside surprise, a scenario which seems likely to boost the Canadian Dollar.
“Fed-speak” is also in focus today, with scheduled remarks by Harker, Mester and Lockhart. If comments by the speakers push forward Fed rate hike bets, and emphasize a move higher this year, the US Dollar may rise after moving lower following the FOMC rate decision.
The Baker Hughes rig count is also on tap. Signs of increasing demand on more drilling activity could go in line with the recent move higher in Crude Oil prices, which seems to have been caused by speculation of a potential OPEC output freeze.
USD/CAD and Crude Oil 10-day correlation currently sits at -0.86, implying that USD/CAD traders might want to be aware of Crude Oil developments and important tech levels.
USD/CAD Technical Levels:
Click here for the DailyFX Support Resistance tool
We use volatility measures as a way to better fit our strategy to market conditions. The USD/CAD is seeing a decline in implied volatility measures, and 20-day ATR readings suggest reduced volatility as well.
In turn, this may imply that the longer term range bound conditions might still be more likely.
USD/CAD 30-Min Chart: September 23, 2016
(Click to Enlarge)
The USD/CAD is reacting nicely from resistance around 1.3080.
Other resistance levels to watch in the short term might be 1.31, the area below 1.3150 and 1.32.
Levels of support may be found at 1.3030, the big 1.30 figure, 1.2980, 1.2950 and 1.29.
In the short term, GSI is showing similar past momentum patterns indeed continued to the downside more often than not.
The GSI indicator above calculates the distribution of past event outcomes given certain momentum patterns. By matching events in the past, GSI describes how often the price moved in a certain direction.
You can learn more about the GSI here.
We generally want to see GSI with the historical patterns significantly shifted in one direction, which alongside a pre-determined bias and other technical tools could provide a solid trading idea that offer a proper way to define risk.
We studied over 43 million real trades and found that traders who successfully define risk were three times more likely to turn a profit.
Read more on the “Traits of Successful Traders” research.
Meanwhile, the DailyFX Speculative Sentiment Index (SSI) is showing that about 43.3% of FXCM’s traders are long the USD/CAD at the time of writing.
You can find more info about the DailyFX SSI indicator here
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
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
You can receive Paul’s analysis directly via email bysigning up here.
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
- A muted price reaction. Market looks relaxed, but it is still on edge waiting for what Iran will do
- Very relaxed at USD 75/b. Risk barometer will likely fluctuate to higher levels with Brent into the 80ies or higher coming 2-3 weeks
- Brent needs to fall to USD 58/b to make cheating unprofitable for Kazakhstan
- All eyes on OPEC V8 and their July quota decision on Saturday
- Brent steady at $65 ahead of OPEC+ and Iran outcomes
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