USD/CAD forecast: Oil prices and the Fed dictated the show, 200-DMA caps multiple tests


  • USD/CAD rejected heavily by the bears at 200-DMA.
  • CAD supported on the price of oil.

This was the week: 

The Federal Reserve was a let down for the US Dollar bears in the week and the Canadian Dollar picked up a welcomed bid due to a huge spike in the price of global oil prices. While the Federal Reserve was the expected focal point for the pair, weekend attacks on Saudi oil facilities took the spotlight from the get-go and sent the price of oil in the furthest spike since the Global Financial Crisis. WTI rallied over 15% on the open and funds gapped lower. However, the Dollar picked up a safe-haven bid and the Fed' delivered a hawkish cut which leant support to Dollar crosses, including funds. 

Key CAD events:

As for Canadian events, the week ahead is a blank spot, but the prior week delivered Retail Sales and Consumer Price Index. Canadian Retail Sales have been soft this year to date, although headline sales this time around edged up 0.4% which is the first rise in three months. Excluding price impacts, volume sales were unchanged, both from a month earlier and from year-ago levels. As for headline CPI, this ticked lower to 1.9% year-over-year and Core inflation remained steady at 2%. However, with oil set to rise, the inputs from gasoline prices are likely to be a factor for the Bank of Canada to consider. 

Key U.S. events:

The Federal Reserve delivered a hawkish 25 basis point rate cut, with the market discounting the probability of another rate cut as soon as next month or even this year. Fed's Chair Powell's non-committal guidance at the press conference enabled the US Dollar to climb higher in a risk-off environment on the week. Looking ahead, we will have a slew of Fed Officials which will be of particular interest for next week.

"NY Fed President Williams is likely to appear open to further accommodation, while voters Evans and Bullard will make the case for the doves at the FOMC. We also look for remarks by voters George (hawkish dissent) and Quarles," analysts at TD Securities noted. Also, we will have Producer Price Index and CPI data that should suggest a notable pick-up in August core inflation to 1.8% from 1.6% before, as temporarily-weak components continued to rebound during the month, according to analysts at TDS:

"Headline CPI likely rose a tenth to 1.5% y/y. Separately, personal spending data should support the view that the US consumer remains resilient. We expect a firm increase in services spending to lead the upside."12.5K

GMT
Event
Vol.
Actual
Consensus
Previous
Thursday, Sep 19
14:00
5.49M
5.37M
5.42M
14:00
1.3%
-0.4%
2.5%
14:30
84B
78B
78B
15:30
1.95%
 
1.94%
Friday, Sep 20
12:15
 
 
15:20
 
 
17:00
719
 
733
19:30
427.1K
 
428.2K
19:30
$282.6K
 
$269.7K
19:30
$-11.7K
 
$-16.4K
Monday, Sep 23
12:30
 
-0.35
-0.36
13:45
 
50.3
50.3
13:45
 
49.6
50.7
13:45
 
51.5
50.7
13:50
 
 
15:30
 
 
1.945%
15:30
 
 
1.87%
Tuesday, Sep 24
12:55
 
 
-0.9%
12:55
 
 
5.4%
13:00
 
2.2%
2.1%
13:00
 
0.3%
0.2%
14:00
 
 
14:00
 
-11
1
17:00
 
 
1.516%
20:30
 
 
0.592M
Wednesday, Sep 25
11:00
 
 
-0.1%
14:00
 
0.660M
0.635M
14:00
 
3.9%
-12.8%
14:30
 
 
1.058M
17:00
 
 
1.365%
Thursday, Sep 26
12:30
 
212K
208K
12:30
 
 
212.25K
12:30
 
1.672M
1.661M
12:30
 
2.4%
2.5%
12:30
 
2%
2%
12:30
 
0.3%
0.2%
12:30
 
$-77.327B
$-72.340B
12:30
 
0.4%
2.3%
12:30
 
1.7%
1.7%
14:00
 
-1.9%
-0.3%
14:00
 
0.3%
-2.5%
14:30
 
78B
84B
15:00
 
-3.9
-2.0
17:00
 
 
1.489%
Friday, Sep 27
12:30
 
0.2%
0.2%
12:30
 
1.3%
1.4%
12:30
 
0.4%
0.1%
12:30
 
0.2%
0.2%
12:30
 
0.3%
0.6%
12:30
 
1.6%
1.6%
12:30
 
-3.1%
2.0% Revised from 2.1%
12:30
 
1.0%
0.2% Revised from 0.4%
12:30
 
0.1%
1.3% Revised from 1.4%
12:30
 
0.1%
-0.4%
14:00
 
92.1
92.0
17:00
 
 
719
19:30
 
 
$-11.7K
19:30
 
 
427.1K
19:30
 
 
$282.6K

USD/CAD Technical Analysis

USD/CAD has tested on multiple occasions throughout the week the 200-day moving average and a confluence of the 50% Fibonacci mean reversion of the July rally to September highs, accumulated around 1.33 the figure which guards the 1.34 handle and mid-June highs. On a break below the 21-DMA, bears will look to the July lows just ahead of 1.30 the figure which guard a run to the 1.28 handle and a 161.80% Fibo extension.

USD/CAD daily chart


 

USD/CAD Forecast Poll

1 Week
Avg Forecast 1.3266
100.0%93.0%60.0%06065707580859095100
  • 60% Bullish
  • 33% Bearish
  • 7% Sideways
Bias Bullish
1 Month
Avg Forecast 1.3264
100.0%83.0%35.0%030405060708090100
  • 35% Bullish
  • 48% Bearish
  • 17% Sideways
Bias Bearish
1 Quarter
Avg Forecast 1.3271
100.0%60.0%30.0%030405060708090100
  • 30% Bullish
  • 30% Bearish
  • 40% Sideways
Bias Sideways
  •  

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