USDCAD jumped following the release of upbeat data from the United States earlier today (ADP and ISM services). Drop in oil prices following release of DOE data also contributed to weakness of the Canadian dollar against the US dollar. While the pair has been strengthening since European morning, release of the aforementioned data pushed the pair to daily highs. However, as the time passed the situation began to reverse - USDCAD began to erase gains, even as crude prices held lower.
A look at USDCAD at daily intervals shows that the pair failed to break above the 200-session moving average in the 1.2445 area (purple line). Shape of today's daily candlestick suggests that the ongoing, brief upward correction may be about to end. Note that today's daily high was reached just a touch below the upper limit of the local market geometry in the 1.2460 area, what further supports bearish reversal. The pair is likely to become more volatile when the FOMC announces a monetary policy decision today at 6:00 pm GMT. Taper announcement looks like a done deal but size and timing of tapering is uncertain. Should the Federal Reserve decide on a large tapering (i.e $20 billion less in monthly purchases) with immediate launch (in November), USD may strengthen and USDCAD may rise along.
Start investing today or test a free demo
Create account Try a demo Download mobile app Download mobile appSource: xStation5
The content of this report has been created by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, (KRS number 0000217580) and supervised by Polish Supervision Authority ( No. DDM-M-4021-57-1/2005). This material is a marketing communication within the meaning of Art. 24 (3) of Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (MiFID II). Marketing communication is not an investment recommendation or information recommending or suggesting an investment strategy within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse (market abuse regulation) and repealing Directive 2003/6/EC of the European Parliament and of the Council and Commission Directives 2003/124/EC, 2003/125/EC and 2004/72/EC and Commission Delegated Regulation (EU) 2016/958 of 9 March 2016 supplementing Regulation (EU) No 596/2014 of the European Parliament and of the Council with regard to regulatory technical standards for the technical arrangements for objective presentation of investment recommendations or other information recommending or suggesting an investment strategy and for disclosure of particular interests or indications of conflicts of interest or any other advice, including in the area of investment advisory, within the meaning of the Trading in Financial Instruments Act of 29 July 2005 (i.e. Journal of Laws 2019, item 875, as amended). The marketing communication is prepared with the highest diligence, objectivity, presents the facts known to the author on the date of preparation and is devoid of any evaluation elements. The marketing communication is prepared without considering the client’s needs, his individual financial situation and does not present any investment strategy in any way. The marketing communication does not constitute an offer of sale, offering, subscription, invitation to purchase, advertisement or promotion of any financial instruments. XTB S.A. is not liable for any client’s actions or omissions, in particular for the acquisition or disposal of financial instruments, undertaken on the basis of the information contained in this marketing communication. In the event that the marketing communication contains any information about any results regarding the financial instruments indicated therein, these do not constitute any guarantee or forecast regarding the future results.