Abstract:The Canadian Dollar may be getting ready to reverse against the US Dollar after increasingly bearish USD/CAD technical signals. Ahead, the Yen may weaken as AUD and NZD gain.
Asia Pacific Market Open Talking Points
Canadian Dollar outperformed alongside the British Pound on Friday
USD/CAD could be inching closer towards a reversal of its uptrend
Asia Pacific equities may follow Wall Street higher as Yen weakens
Find out what the #1 mistake that traders make is and how you can fix it!
The sentiment-linked Canadian Dollar outperformed against its major counterparts on Friday as risk aversion cooled into the end of the week. Canadas benchmark TSX Composite rose about 0.9 percent as Wall Street continued trimming losses from Wednesday when the Dow Jones Industrial Average experienced its worst performance in a single day since 2018.
The rosy mood in financial markets, especially from North America, followed rising bets of quantitative easing out of Europe and fading concerns of a “no-deal” Brexit that lifted the British Pound as well. In the US, we saw fading intensity in the inversion of the 10-year and 3-month yield curve. The United States is Canadas largest trading partner and fading concerns of a recession in the former could boost CAD.
Canadian Dollar Technical Analysis
Taking a closer look at USD/CAD reveals increasingly bearish signals that may reverse the near-term uptrend from the middle of July. A bearish Evening Star candlestick pattern formed under resistance (1.3318 – 1.3345) as negative RSI divergence emerged. The latter shows fading upside momentum that can at times precede a reversal. This places the focus on rising channel support (parallel red lines below).
USD/CAD Daily Chart
Chart Created Using TradingView
Mondays Asia Pacific Trading Session
With that in mind, a relatively quiet economic docket to begin the new trading week during Asia Pacific hours places the focus on risk trends absent sudden updates on the trade war front. APAC equities may echo gains from Fridays Wall Street trading session, perhaps further pressuring the anti-risk Japanese Yen. Meanwhile, the pro-risk Australian and New Zealand Dollars may aim cautiously higher
FX Trading Resources
See how the S&P 500 is viewed by the trading community at the DailyFX Sentiment Page
See our free guide to learn what are the long-term forces driving Crude Oil prices
See our study on the history of trade wars to learn how it might influence financial markets!
Disclaimer:
The views in this article only represent the author's personal views, and do not constitute investment advice on this platform. This platform does not guarantee the accuracy, completeness and timeliness of the information in the article, and will not be liable for any loss caused by the use of or reliance on the information in the article.
The week ahead: Top 5 things to watch
While the BOC has turned more hawkish, other fundamental factors are working against the Canadian Dollar in the near-term. Volatility and weakness in oil prices coupled with a stretch of disappointing Canadian economic data are weighing on the Loonie. According to the IG Client Sentiment Index, USD/CAD rates have a bullish bias in the near-term.
JAPANESE YEN, EUR/JPY, CAD/JPY - TALKING POINTS AND ANALYSIS
JAPANESE YEN, USD/JPY, AUD/JPY - TALKING POINTS