USD/CAD Up 19 Pips Over Past Hour; in an Uptrend Over Past 30 Days

Hourly Update

(Last Updated September 16, 2022 1:35 GMT)

At the time of this writing, USDCAD’s rate is up 19 pips (0.15%) from the hour prior. It’s been a feast for bulls operating on an hourly timeframe, as USDCAD has now gone up 4 of the past 5 hours. As for the trend on the hourly timeframe, we see the clearest trend on the 20 hour timeframe. The moving averages on the hourly timeframe suggest a choppiness in price, as the are all in a mixed alignment — meaning the trend across timeframes is inconsistent, indicating a potential opportunity for rangebound traders.

USDCAD End of Day Recap

Updated 00:30 GMT (04:30 EST)

The choppiness in the recent daily price action of USDCAD continues; to start today, it came in at a price of 1.3227, up 64 pips (0.49%) since yesterday. Relative to other instruments in the Forex asset class, USDCAD ranked 9th yesterday in terms of percentage price change. The price chart of USDCAD below illustrates.

USDCAD

USDCAD Technical Analysis

The first thing we should note is that USDCAD is now close to its 20 and 50 day averages, located at 1.3076 and 1.2966 respectively, and thus may be at a key juncture along those timeframes. Trend traders will want to observe that the strongest trend appears on the 30 day horizon; over that time period, price has been moving up. Or to simplify this another way, note that out of the past 10 days USDCAD’s price has gone down 6 them.

The View From Around the Web

Of note is that traders in aggregate have opinions on USDCAD, with 13 buy signals on our radar and 9 sell signals. This imputes a buy/sell ratio of 1.44, which is bullish. As for the rationale, technical traders seem to be citing the appearance of demand zone technical patterns. Here’s a piece we found on forexlive.com; below is a short snippet from it to give you a taste.

<p>Oil and gas are soft today in what looks like a giveback from yesterday as a potential rail strike was avoided.</p><p>In the bigger picture, the loonie is struggling against overwhelming and broad US dollar strength. Canadian housing data today showed a 1% price decline but there are signs of stabilization. Those could unravel quickly though if the Bank of Canada continues to hike. </p><p>In trading USD/CAD at the moment, it's critical to appreciate the differences in the mortage markets. In the US, the 30-year fixed is king. That means that rate hikes have no direct impact on people who already own their homes, which is 95% of people. There's a drag for things like home-equity loans but overall the impact is much smaller.</p><p>In Canada, the mortgage market is a combination of variable rates that adjust monthly and 5-year fixed resets. The variable rate holders — which increased during the boom — suffer immediately while one-fifth of five-year resets feel the brunt of rate changes each year.</p><p>What it means is that Canadian households and consumers will feel a more-immediate squeeze from higher rates. There will also be a rolling effect with rates staying high. Combined, it means BOC hikes hit harder and faster than in the US.</p><p>Moreover, the Canadian economy has been far too reliant on housing for many years.</p><p>Together that means the Bank of Canada likely can't hike rates above 4% and even hiking above 3.5% could be a policy mistake. If inflation lingers, the Fed will eventually decouple from the BOC. Speculation that's coming (on a more-aggressive Fed) is a catalyst for a sustained break above 1.3200.</p><p>Zooming out, there is some resistance near 1.3400 but I think the eventual top will fall in the 1.3700 range. Eventually, the loonie will be a strong currency as the cycle shifts and commodites rally on better global growth (and underinvestment in the space) but that's a few steps away.</p> This article was written by Adam Button at forexlive.com.