Canadian Dollar: Bearish trend targets 1.4125 – Scotiabank

FXStreet Insights Team FXStreet

Scotiabank strategists Shaun Osborne and Eric Theoret highlight that the Canadian Dollar (CAD) is marginally weaker versus the US Dollar (USD), with USD/CAD at its highest since late July. They stress wide yield spreads and typical negative Q4 seasonality as key headwinds for CAD. Short-term technicals are bullish, with the pair breaking key retracement resistance and seen on track toward 1.4125, while support is noted around 1.4050/60 and 1.3990/00.

CAD faces Q4 seasonal headwinds

"The CAD is down marginally versus the USD this morning but losses are limited and the CAD is the “best of the rest” (of the G10 currencies) after the USD. Still, modest USD gains lift funds to the highest since late July, echoing the broader USD trend."

"Wide spreads are the biggest drag on the CAD’s fundamental performance and negative CAD seasonality in Q4 means the risk of stronger headwinds for the CAD in the coming weeks."

"October and November returns for the CAD versus the USD are typically negative, with the CAD also trading generally softer on some of the key crosses (EUR,GBP) between through Q4. Note that AUD/CAD is testing the waters around and above par for the first time in nine years."

"AUD gains look fully supported by evolving fundamentals so positive Australian jobs data this evening should help solidify gains in the cross and a bullish technical breakout from the consolidation range in place since May. "

"Bullish—USD gains are progressively knocking off retracement resistances, with the push above 1.4050 (61.8% retracement of the USD’s June/August drop) keeping spot on track for 1.4125 (76.4% Fibonacci resistance). USD strength is supported by bullish intraday and daily trend oscillators. Initial USD support is 1.4050/60, ahead of 1.3990/00."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD meets fresh supply and tests 0.7100 amid weak Australian PMIs

AUD/USD has come under fresh selling pressure and is testing 0.7100 in the Asian session on Wednesday. Australia's flash PMIs showed manufacturing slipped into contraction and services expanding slowly for a second straight month, renewing the pair's downside. Furthermore, a bullish US Dollar acts as a headwind for the pair as traders keenly await the crucial Trump-Xi summit on Thursday. Meanwhile, markets shrug off US-Iran indirect talks.

USD/JPY stands firm near mid-157.00s, close to two-week high

USD/JPY hovers around mid-157.00s in the Asian session on Wednesday, near two-week highs touched last Friday as the BoJ's dovish rate hike continues to undermine the Japanese Yen. Meanwhile, the US Dollar remains firm amid the Fed's hawkish stance, adding support to the pair, though JPY intervention fears cap further gains. Markets pay little heed to the completion of the round of US-Iran indirect talks ahead of Trump-Xi meeting.

Gold falls as strong US PMI data gives Fed room to raise rates again

Gold (XAU/USD) trades on the back foot on Wednesday as expectations of further Federal Reserve (Fed) interest rate hikes lift the US Dollar (USD) and weigh on the non-yielding metal.

Crypto Today: Bitcoin and Ethereum consolidate gains as XRP extends breakout

Bitcoin (BTC) is moderating on Wednesday, trading near $86,000 as the crypto market broadly consolidates. Ethereum (ETH) mirrors BTC’s stable outlook, holding above $2,700. Ripple (XRP), meanwhile, edges higher for the sixth consecutive day, currently sitting above $1.61 as bulls tighten their grip.

Oil rebounds above $90: Why is the Canadian Dollar still falling?

USD/CAD extends its advance on Wednesday and trades around 1.4090 at the time of writing, up 0.21% on the day. The pair remains close to its recent highs, supported by a firm US Dollar (USD), while the Canadian Dollar (CAD) struggles to recover losses from the recent decline in Oil prices. Oil dynamics, however, are becoming less negative for the Loonie.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.