USD/CAD: Technical Outlook

Fundamental Brief

Stocks of crude oil in the United States went up 1.055 million barrels in the week ended August 5th, 2016, following a 1.413 million increase in the previous week. It was the third consecutive rise while markets were expecting a 1.5 million drop. Meanwhile, gasoline stocks fell by a higher-than-expected 2.807 million barrels, after declining by 3.262 million in the previous week.

CAD summary

• August 5: Employment for July missed estimates with Employment Change printing at -31.2K versus 9.0K expected.

• July 29: GDP for May missed estimates both m/m and y/y at -0.6% and 1.0% respectively.

• July 22: CPI for June printed above expectations across the board with CPI y/y and Core CPI y/y printing at 1.5% and 2.1% respectively.

• July 13: The BoC left rates unchanged as expected at 0.5%, however, downgraded their 2016 and 2017 growth forecasts

USD Summary

• August 5: Employment for July saw NFP and Average Hourly Earnings beat estimates at 255K and 0.3% respectively. The Unemployment Rate slightly missed estimates at 4.9%.

• August 2: PCE Price Index printed in line with expectations for PCE y/y and Core PCE y/y at 0.9% and 1.6% respectively. PCE Core m/m missed estimates at 0.1% versus 0.2% expected.

• July 29: Advanced GDP for Q2 printed far below expectations at 1.2% versus 2.6% expected.

• July 27: The FOMC left rates unchanged as was widely expected with the accompanying statement being interpreted as slightly dovish given concerns over inflation.

• July 15: CPI y/y remained unchanged at 1.0% slightly below expectations of 1.1%, however, Core CPI y/y slightly beat estimates at 2.3% versus 2.2% expected.

Technical Outlook

Currency performances:

1-year performance: 0.86%

6 months performance: -5.86%

3 months performance: -2.08%

1-month performance: 0.54%



Trend analysis: Bearish (50 SMA below 200 SMA)

Levels analysis: Critical support zone at 1.2989 - 1.3005 and resistance zone at 1.3076 - 1.3084

Summary: Well,with a bearish sentiment in the oil prices, I should expect this pair to appreciate. However, price action is currently still showing that price is slowing creeping down after a minor spike up in price upon the news released. To have a better bullish conviction in this pair, I should see the price taking out the critical resistance zone of 1.3076 - 1.3084 so that to be in confluence with the news.

Secular Trend:



Summary: Negative (Below 0), diminishing growth.

Sentiment (Base on CMC Markets Clients)

Number of buyers: 66%


Number of sellers: 34%

Position value of buyers: 66%

Position value of sellers: 34%

Overall sentiment: Bullish