Weekly Forex Analysis: Slippery Slope for USDCAD
The USDCAD could be in for a sustained move lower.
1) The Federal Reserve
A July rate cut by the FED is 100% priced in.
The Fed took a material dovish shift last week. Recent data points have been mixed but evidence of a slowing economy is evident.
Softer than expected inflation and global growth concerns were highlighted as some of the Fed’s biggest concerns.
2) The Bank of Canada
The BoC were less upbeat last week than markets were expecting but analysts explained that was a strategy from the BoC to keep the CAD from strengthening too much.
With a string of positive data points as well as a 20% recovery in oil prices the CAD has been outperforming its peers.
The BoC is one of the only central banks to maintain a neutral bias while majority of others have tilted dovish.
So, what’s the bottom line?
With the Fed starting to ease and the BOC on hold we have a central bank policy divergence.
This should push the USDCAD lower in the medium-term.
00:58 – Why we are looking for shorts on the USD
03:57 – Important Data events to keep track of this week
05:15 – Why we think the CAD should appreciate against the USD
06:30 – How we can look to trade the USDCAD from a Technical perspective
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