The Forex market is struggling to make way and most pairs trade sideways, yet USDCAD is trying to break away from the oscillating trading.
The price was trading sideways between the July low of 1.3035 and the July 1 high of 1.3146, but overnight and this London morning bearish traders started to take the price out of the 110 pips range. If they succeed with resuming the downtrend, the price could slide by the same amount as the rectangle range and reach the October 16 low at 1.2920. The move lower is also influenced by the idea that the Federal Reserve will cut rates, while the Bank of Canada remains reluctant to reduce rates as they remain upbeat on their economy.
BoC did, however, point out that the global economy is struggling due to trade wars, and that is the biggest downside risk to the Canadian economy. Still, they are not worried about the state of the Canadian economy and point out that inflation is around the 2 percent target, that the Canadian economy has started to grow per their projections, and that the labor market is healthy.
The Canadian unemployment rate has dropped to levels not seen in years, and the general trend is downwards, which suggest that the Canadian economy is doing well. However, looking beyond the near term, it is reasonable to assume that if the US economy heads towards a significant slowdown that it will be hard for the Canadian economy to deviate for too long. Yet, the market is not worried about that for the moment, and a slide to below the London session low of 1.3012 might send the USDCAD lower. The trend will remain bearish below the 1.3147 high.Don’t miss a beat! Follow us on Twitter.
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