A Hawkish Bank of Canada Plus Higher Oil Sees USDCAD Lower

Crude Future Chart

  • A July Oil price rebound has reinforced the positive tone for the Canadian Dollar.
  • The Bank of Canada rate hike in early July and hawkish comments point to further rate increases, again helping the Canadian Dollar higher (therefore USDCAD lower).

USDCAD – Bearish trend reinforced

Despite a minor bounce effort on Monday, a failure from just above our 1.2695 resistance (from 1.2701) sustains negative pressures from the significant sell-off Friday through key supports at 1.2676 and 1.2651, aiming lower again Tuesday.

Furthermore, this activity reinforces the June push below 1.3219, which signalled an intermediate-term bearish shift.

For Today:

l We see a downside bias down to 1.2610; below targets 1.2555 and 1.2500 psychological/option level.

l But above 1.2701 opens risk up to 1.2771.

Intermediate-term Outlook – Downside Risks:

l We see a negative tone with the bearish threat to 1.2457.

l Below here targets 1.2127, 1.2000 and 1.1919.

What Changes This? Above 1.3015 signals a neutral tone, only shifting positive above 1.3347.

Daily Chart


ICE Brent Future – Upside bias

September 2017 Contract

Another push higher Monday above the 49.11/18 resistance area and despite an intraday setback the higher high and higher low for the session maintains upside pressures from the mid-July break above 48.29 and 48.45 resistances, keeping the threat higher Tuesday.

The early July push above 49.49 shifted the intermediate-term outlook from bearish to neutral.

For Today:

l We see an upside bias through 49.26; break here aims for 49.90/50.00.

l But below 48.15 opens risk down to 47.55, maybe towards 47.18.

Intermediate-term Range Parameters: We see the range defined by 44.60 and 51.01.

Range Breakout Challenge

l Upside: Above 51.01 aims higher for 55.14.

l Downside: Below 44.60 sees risk lower for 43.57, 41.51 and 40.00.

Daily Chart

Crude Future Chart

Risk Statement: Trading Foreign Exchange on margin carries a high level of risk and may not be suitable for all investors. The possibility exists that you could lose more than your initial deposit. The high degree of leverage can work against you as well as for you.