USD/CAD Daily Video, July 20, 2015

[Sive Morten]

Good morning,

CAD stands on course to 1.3470 target and currently we do not have any reasons to change our expectations. Meantime, hardly CAD will move straight to it without any retracement:






The technical portion of Sive's analysis owes a great deal to Joe DiNapoli's methods, and uses a number of Joe's proprietary indicators. Please note that Sive's analysis is his own view of the market and is not endorsed by Joe DiNapoli or any related companies.

 

[Brett Reynolds]

Yes, a little tricky now but i made good pips on loonie over last 2 weeks and have levels marked at 1.3390-1.3470 as the BIG Monthly 61.8 from January 2002! Wow 13 yr fibo..Right!? I think watch what happens tomorrow as retracement back down to 1.28 area is on the cards. No Rush on this one..plenty more pips to be made!

 

[RahmanSL]

I wonder (and speculate) the real reason & rational behind the Canadian decision to further cut their interest rates especially since they have already done so in Jan'15.
Yes, almost everyone attribute that to weaker than expected GDP, falling oil prices, etc, etc....BUT the loonie appreciated quite a bit between mid Apr-May'15, took a slight hit and appreciated again mid Jun'15, gave up the gains and then recover a little in mid Jul'15 before going all the way to the 1.3 levels last week as a result of cut in rates and falling oil prices (also on news of Iran "deal").

My personal opinion is that the Canadians are positioning their currencies for the much anticipated US rate hikes (oil prices are too unpredictable at this time as general consensus is for a glut in the world market) so that in case of high volatility with the CAD, they will be in better position for further rate cuts or to raise rates as required. In essence, the Canadians are doing all they can to ensure a weak CAD until after the US much anticipated rate hikes when currencies strength & weakness will be left to and be subjected to market forces.

I am curious to see where the USD/CAD will be at in mid Aug'15...also Sept, Oct, Nov, & Dec.....and Dec'15 is when I expect the US Fed to hike the first of their interest rate hikes.

 

[Sive Morten]

I wonder (and speculate) the real reason & rational behind the Canadian decision to further cut their interest rates especially since they have already done so in Jan'15.
Yes, almost everyone attribute that to weaker than expected GDP, falling oil prices, etc, etc....BUT the loonie appreciated quite a bit between mid Apr-May'15, took a slight hit and appreciated again mid Jun'15, gave up the gains and then recover a little in mid Jul'15 before going all the way to the 1.3 levels last week as a result of cut in rates and falling oil prices (also on news of Iran "deal").

My personal opinion is that the Canadians are positioning their currencies for the much anticipated US rate hikes (oil prices are too unpredictable at this time as general consensus is for a glut in the world market) so that in case of high volatility with the CAD, they will be in better position for further rate cuts or to raise rates as required. In essence, the Canadians are doing all they can to ensure a weak CAD until after the US much anticipated rate hikes when currencies strength & weakness will be left to and be subjected to market forces.

I am curious to see where the USD/CAD will be at in mid Aug'15...also Sept, Oct, Nov, & Dec.....and Dec'15 is when I expect the US Fed to hike the first of their interest rate hikes.

Hi Rahman,
recently I've read some articles on canadian economy, and may be you're not far from the fair view on CAD. In fact economists tell that recent rate cut was not neccesary, because canadian economy already shows the signs of recovery, inflation is growing either. This was mostly superb supportive injection from central bank to economy that is becoming healthier. So, this drop in CAD will not last too long. And it really could happen that our 1.3470 target will become a reversal point as well...

 

[RahmanSL]

With over USD18.5trillion debt deficit (almost twice that of no.2 the UK, and the combined debt of no.3 to 7 of the other highest countries) , the US is a world powerhouse but is a debt ridden nation as well...and there are no clear signs and direction on how and when they will begin to contain and to reduce the debt which runs at 106% of GDP.
During last FED Chairwoman testimony before Congress/Senate, the humongous debt problem was addressed briefly, "quickly dealt with", and kicked further down the road which is fast approaching & terminating at a very high cliff.

I am deeply skeptical and concern with the US economy which might very well be labelled "Made in U.S.A" instead of "Made in China" for the next economic crisis.