Fundamental and Technical Outlook: USD/CAD

Fundamental Outlook: USD/CAD

Early in the Asia-Pacific session this week API Crude Oil Inventories saw an increase of 924K barrels, this follows from reports in yesterday's New York session that Iran plan's to increase its output by 4 million barrels per day by year-end. Consequently, WTI has seen another leg lower to $45.75.

During today's London session the main data release will be European Flash Estimate CPI.

In today’s session, we expect the strongest currency to be USD as USD sentiment continues to remain positive following last Friday's Fed comments.

The weakest currency is expected to be CAD as continued weakness in WTI is likely to keep CAD under pressure.

The USDCAD pair is currently priced at 1.3090.

There are several levels including the current price level which can be considered for buying opportunities:

The price levels below could be used to buy from as price retraces into them:

1.3070, 1.3037, 1.2945

The price level below could be used to buy from as price breaks out above:

1.3115

Source: Jarratt Davis

Technical Outlook: USD/CAD

Indicators: Bearish (50 sma below 200 sma)

Price action: Price is currently trading in a gradual uptrend channel

Summary: I am expecting the price to continue trending up in the short term within this bullish channel



Market Opening Wrap

In Asian Equity Markets stocks eased on Wednesday following modest losses on Wall Street, with investors awaiting U.S. jobs numbers for further signs the Fed may raise rates as soon as September. MSCI's broadest index of Asia-Pacific stocks outside Japan was down 0.3 percent. The Nikkei gained 0.8 percent to 16,856.98 in mid-morning trade after touching 16,885.36, the highest level since August 16. The benchmark index has risen 1.7 percent this month. Chinese stocks were mixed, with the CSI 300 index gaining 0.1 percent and the Shanghai Composite  down 0.1 percent. They are on track for gains of 3.5 percent and 3.1 percent for the month, respectively. Hong Kong's Hang Seng index was up 0.1 percent, poised to end August 5.3 percent higher.

In Currency Markets the dollar rose to a one-month high against the yen on Wednesday as investors reversed the bets they had made on speculation that the U.S. Federal Reserve would not hike interest rates anytime soon. The dollar was steady at 102.96 yenafter rising as high as 103.135 yen overnight, its strongest since July 29. It was up 0.9 percent for the month.  The euro was little changed at $1.1153, hovering near a three-week low of $1.1133 plumbed on Tuesday. The Australian dollar edged up 0.2 percent to $0.7526 on bargain hunting after its overnight slide to a one-month trough of $0.7500 against the broadly stronger U.S. currency. The dollar index was little changed at 95.956 after rising to 96.143 overnight, its highest since August 9.

In Commodities Markets crude oil futures fell in early trade on Wednesday as the U.S. dollar held around three-week highs and industry stocks data indicated a build in U.S. crude inventories. International Brent crude oil futures were trading at $48.27 per barrel, down 0.2 percent, from their previous close. U.S. West Texas Intermediate crude futures were down 0.4 percent, at $46.19 a barrel. Spot gold rose 0.3 percent to $1,314.19 per ounce. Silver rose 1 percent to $18.77 an ounce. Platinum was up 0.7 percent at $1,058.90. It touched an eight-week low of $1,048 Tuesday. Palladium rose 0.9 percent after touching a five-week low of $670.72 in the previous session.

In US Equity Markets Apple Inc was the largest weight on U.S. stock indexes on Tuesday after antitrust regulators ordered the company to pay about $14.5 billion in back taxes to the Irish government, but gains in bank stocks partly offset the decline. The Dow Jones industrial average fell 0.26 percent, to 18,454.3, the S&P 500 lost 0.2 percent, to 2,176.12 and the Nasdaq Composite fell 0.18 percent, to 5,222.99. The S&P 500 financial sector is up 1.8 percent so far this week, compared with a 0.3 percent advance for the S&P. Abercrombie & Fitch lost 20.3 percent after the teen apparel retailer posted its 14th straight quarter of declining sales and said it no longer expects comparable sales to improve this year.

In Bond Markets U.S. Treasury debt prices were little moved on Tuesday with investors largely holding their positions after comments from Federal Reserve Vice Chair Stanley Fischer that put a spotlight on Friday's non-farm payrolls report. Benchmark 10-year Treasury notes fell 1/32 in price to yield 1.570 percent. Two-year Treasury notes also hovered near their late Monday levels, yielding 0.801 percent.

Source: Institute of Trading and Portfolio Management