jeudi 12 mars 2015
USDCAD: Breakout or Rangebound?
Posted on 15:36 by nice news
The second half of North American trade was much like the first if you were to only look at US equities as both the Dow and S&P 500 started out strong and ended the same way with both rising over 1% on the day. The USD, on the other hand, made an about face just before lunch and maintained for the rest of the day. The dismal Retail Sales figures this morning did the USD no favors, but it was simply just a bump in the road on the way to ever higher levels for King Dollar. At least that’s the theory that has been very successful over the last few months as the USD has continued to gain, however, that likely won’t last forever.
One very important test of that USD king of the hill mentality is in the USD/CAD which has been stuck in a 400 pip range since the end of January. The leveling off of oil prices has helped the CAD from falling further, and the Bank of Canada deciding not to cut interest rates again chipped in as well. However, oil broke out of its own range today to the downside, and some are calling for it to fall below the 2015 low of $43.57. If that were to happen, the CAD may not be able to withstand the drop and could lose value against the USD.
On the other hand, Canada will be releasing their Employment Change tomorrow morning which is expected to decline by 3.5k. Sometimes low expectations can be a blessing in disguise for an economy as even a lackluster result could be greater than anticipated, thus giving strength to its currency. Last month’s Canadian Employment Change was expected to be dismal as well, but had a strong showing instead and served to strengthen the beaten down CAD and helped maintain the range it has been mired in. If that were to be repeated, there’s a lot of room to the downside of the range.
The worst case scenario for USD
One very important test of that USD king of the hill mentality is in the USD/CAD which has been stuck in a 400 pip range since the end of January. The leveling off of oil prices has helped the CAD from falling further, and the Bank of Canada deciding not to cut interest rates again chipped in as well. However, oil broke out of its own range today to the downside, and some are calling for it to fall below the 2015 low of $43.57. If that were to happen, the CAD may not be able to withstand the drop and could lose value against the USD.
On the other hand, Canada will be releasing their Employment Change tomorrow morning which is expected to decline by 3.5k. Sometimes low expectations can be a blessing in disguise for an economy as even a lackluster result could be greater than anticipated, thus giving strength to its currency. Last month’s Canadian Employment Change was expected to be dismal as well, but had a strong showing instead and served to strengthen the beaten down CAD and helped maintain the range it has been mired in. If that were to be repeated, there’s a lot of room to the downside of the range.
The worst case scenario for USD
USDCAD: Breakout or Rangebound?
Categories: USDCAD: Breakout or Rangebound?
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