USDCAD Technical Analysis – October-9-2023
The crucial point for investors in the USDCAD technical analysis is at 1.3600, influenced by surging Oil prices and a resurgence in USD demand.
USDCAD Market Analysis
Reuters – The USDCAD Market Analysis shows that the pair has been on a downward trend for three days in a row, moving further away from its peak since March 24, around 1.3785. Crude Oil prices jumped about 4% during the Asian market hours due to growing tensions in the Middle East. This, along with positive job data from Canada last Friday, supports the Loonie (the Canadian dollar) and puts pressure on major currencies.
In Gaza, Palestine, the Hamas group launched several rockets at Israel, and Palestinian militants entered Israeli territory at various points. This led to a series of Israeli air strikes on Gaza, causing hundreds of casualties on both sides. These events increase the risk of a larger conflict in the Middle East and raise concerns about potential disruptions to oil supply, thereby pushing up Crude Oil prices.
On Friday, Statistics Canada announced that the economy added 63,800 jobs in September, keeping the unemployment rate steady at 5.5% for the third month in a row. This exceeded market expectations. Additionally, the average hourly wage increased to 5.3% from the 5.2% annual rise in August. This is seen as an indication that the labor market remains strong despite high-interest rates and increases the likelihood of further policy tightening by the Bank of Canada (BoC). From the US side, the headline Nonfarm Payrolls (NFP) exceeded even the most optimistic estimates and increased by 336K in September.
Moreover, the previous month’s reading was revised upwards to 227K from 187K initially reported. However, wage growth was relatively subdued and eased inflationary concerns, reassuring investors that the Federal Reserve (Fed) might soften its hawkish stance.
Despite this, USDCAD Market Analysis shows that data reaffirmed market expectations for at least one more rate hike by the US central bank in 2023, which continues to support elevated US Treasury bond yields. Besides this, the current risk-off environment provides some support to the safe-haven US Dollar (USD) and should help limit any further losses for the USDCAD pair. Traders might also prefer to wait for fresh cues about the Fed’s future rate hike path.
Therefore, attention now turns to USDCAD Market Analysis of the release of the FOMC meeting minutes due on Wednesday, followed by the latest US consumer inflation figures on Thursday. This will play a key role in driving USD demand in the near term. In the meantime, Oil price dynamics, along with broader risk sentiment and speeches by influential FOMC members, will be watched for short-term trading opportunities on Monday.
USDCAD Technical Analysis
FxNews – The USDCAD technical Market Analysis reveals a bullish outlook for the USDCAD currency pair. Currently, the pair is undergoing a crucial test at the 1.3655 support level. The Relative Strength Index (RSI) indicator on the USDCAD daily chart is maintaining a position above the 50 line, suggesting a potential upward trend.
If the 1.3655 support level holds, it could reinforce the bullish scenario. The next target for the bulls would be the 1.39 resistance area, which could serve as a significant milestone in this bullish journey.
However, it’s important to consider the alternative scenario as well. If the bears manage to push the USDCAD price below the 1.3655 support level and secure a close below this point, it could trigger a decline towards the 1.355 pivot point.
In conclusion, our USDCAD Market Analysis indicates that the pair’s future direction hinges on whether it can maintain support at 1.3655 or if it succumbs to bearish pressure and falls below this critical level. As always, traders should keep an eye on these key levels and adjust their strategies accordingly.
J.J Edwards is a finance expert with 15+ years in forex, hedge funds, trading systems, and market analysis.