A more technical look at the markets from InterTrader
The Canadian dollar continued to appreciate against the greenback as traders increased their appetite for risk.
With GDP expected to increase 0.2% in May, having expanded 0.3% in April, and with input costs projected to weaken for the second consecutive month in June, speculation for a Back of Canada rate hike is likely to be dampened.
If we take into consideration what happened last summer, there are quite a few similarities.
Should the BoC continue its wait-and see approach, the main game changer for the USD/CAD this week would be Wednesday’s FOMC interest rate decision.
Considering Friday’s good news on Q2 GDP and the extension of Operation Twist at the last meeting, it is rather unlikely that the Fed will make the much speculated and partially priced in movement of further QE. This leaves room for the US dollar to gain strength.
As the USD/CAD forex spread betting pair is currently bouncing off the lower bounds of the downward channel carried over from June, the technical set up may be supportive of a correction in the price movement.
With the pair hovering around key support at 1.004 (61.8% Fibonacci retracement) and the upside break in the RSI on the daily spread betting chart, we could see a bullish breakout all the way up to the resistance area at 1.0394.
Good luck and happy trading
Dafni Sedari, InterTrader
(Original article written 30 July 2012).
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