USD/CAD Forecast August 7, 2017, Technical Analysis

USD/CAD daily chart, August 07, 2017

The US dollar initially went sideways during the day on Friday, as we hovered around the 1.2575 level. The market broke higher during the day, slicing through the 1.26 handle, as the US jobs market produced far more jobs than anticipated. At the same time, the Canadian job numbers missed by some few thousand, and that shows that the resiliency in the US economy is picking up. The market has bounced off a major uptrend line on the weekly chart as well, and the “W pattern” that we see from several sessions ago could be the bottom of the selloff. I believe that the market should continue to go much higher and I am a buyer of dips.

Toronto housing market

The Toronto housing market is starting to pop the bubble finally. The last month has seen a decline of 40% in transactions, and 4% and pricing. This will probably keep the Bank of Canada from raising rates as quickly as people had anticipated, so this also has a knock-on effect with the bond trade that has been in effect recently, as people have been buying Canadian bonds, and shorting American notes. Ultimately, the market should continue to be a “buy on the dips” situation, and I think that the 1.30 level above is the longer-term target. If we can break above there, the market will go much higher. I don’t know that we will see an explosive moved to the upside but I think we are starting to see an unwind of the US/Canadian bond trade. The 1.25 level underneath begins a massive amount of support, as the longer-term trend is very much intact. Ultimately, this is a market that should continue to be volatile but positive going forward as the uptrend line was so important over the last several years.

Written by FX Empire