Demand for the Canadian Dollar Has Increased. We Are Waiting for Important Economic Reports

Last week, the Statistics Canada released optimistic inflation data that supported the Canadian dollar. In July, consumer prices in the country rose by 0.5%, which is significantly higher than market expectations at 0.1%. The USD/CAD currency pair moved down and updated local extremes.

At the moment, financial market participants expect a report on retail sales in Canada for June, which will be published on Wednesday, August 22 (15:30 GMT+3:00). This is an important indicator of consumer spending, which is also a mark of the country's economic growth.

Experts expect that the volume of retail sales in Canada will slow from 2.0% to 0.3%. The base retail sales index will be 0.1% compared to the previous value of 1.4%. We recommend paying attention to the difference between the actual and the forecasted values.

Canada REtail Sales

It should be noted that these statistics may affect the views of the representatives of the Bank of Canada on the future fate of monetary policy. At the moment, more than 75% of participants in financial markets assess the likelihood of an increase in rates by the Central Bank in October this year.

We also recommend you to follow the current news on NAFTA, which may have a significant impact on the dynamics of Loonie. Recent media reports show that negotiations between the US and Mexico are likley to be closed in a deal. At the same time, the future of the new agreement will directly depend on the decision of Canada.

Let's consider the current technical pattern on the USD/CAD currency pair
  • Support levels: 1.30500, 1.30000, 1.29650
  • Resistance levels: 1.31100, 1.31700, 1.32150
USD/CAD Pattern

Currently, USD/CAD is consolidating near the key support level of 1.30500. In the trading instrument a classic figure of technical analysis, Double top, has been formed, which signals a bearish sentiment. Indicators point to the power of sellers:
- the price has fixed below 50 MA and 200 MA;
- the MACD histogram has moved to the negative zone and continues to decline.

We recommend opening positions from the key levels.

If the price fixes below the support level of 1.30500, it is necessary to consider sales of USD/CAD. The immediate goal for profit taking is the round level of 1.30000. The movement is tending to 1.29650-1.29500.

Alternative option. If the price fixes above 1.31100, we expect the USD/CAD quotes to rise. The target movement level is 1.31700-1.32150.

Confirmations and entry points to the market should be looked for on lower timeframes. When following the positions, we recommend using a trailing stop.

by JustForex, 2018.08.21

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Open Account

Get Free Analytics

* required fields
Last Articles
All Articles
Monetary Policy Statement: What you need to know
Almost every month in the economic calendar, traders can see such events as the monetary policy meeting minutes. As a rule, during the publication of this protocol, the volatility increases sharply. Let's find out what this protocol is and whether it is possible to make money on it.
Read more
Forex Trade in Nigeria: Choosing the Right Timing for Successful Trading
The Nigerian economy is strong and blossoming, so it provides plenty of opportunities for earning, investing, and making more money. Forex trading is one of the ways to multiply your savings, but there are many factors that impact the outcome of your trading. Along with choosing the right currency pair, you need to carefully calculate when to trade (and when not to trade). This article will help you keep track of the best trading periods by the Nigerian time and how to decide when to enter the trades and when to refrain from them.
Read more