USDCAD Analysis – Interest Rate Expectations Drop And the CAD Follows
The Canadian dollar today dropped heavily versus the U.S. dollar after Canadian GDP (gross domestic product) surprisingly dipped during February and added weight to a “no rate change” scenario. The CAD likewise dropped 1.27% versus the Japanese Yen which was experiencing broad based market strength. Month end flows/book closing may have also played a part in todays UDSDCAD price action; the Canadian dollar has outperformed its currency major counterparts over recent trading sessions.
Recent speculation that the Bank of Canada would raise borrowing costs has seen the “Loonie” move strongly away from parity. The Canadian dollar had in fact advanced to the upside versus all of the FX major counterparts apart from the Japanese yen last week. The following chart shows the relative movements of currency majors today.
Currency Market Movement 30/4/2012
US Dollar / Canadian Dollar Technical Analysis Overview
The USDCAD currency rate had broken below range resistance around 0.9850 – 0.9870 and this level has subsequently provided initial resistance on the upside move today.
A bullish daily candle is hinting at further upside potential.
Any prolonged move higher for USDCAD could potentially meet with strong selling pressure at the parity level which is closely aligned with the 200 Day SMA (Simple Moving Average).
The longer term down trend structure remains until a daily close is seen above the 1.0050 area.
The USDX dollar index has formed a daily doji around 78.70 area previous support showing indecision on this front.
USDCAD D1 Chart