USD vs CAD - Daily FX Chart 23rd April 2009
Yesterday’s candle was a carbon copy of Tuesday’s, with the only difference being that the body of the candle closed higher as opposed to Tuesday’s which closed lower. Both candles were accompanied with long upper shadows which both failed to penetrate the 40 day moving average and reinforcing the view that we should expect to see the usd to cad pair fall in due course from these bearish signals, but the strength of this move will only be confirmed once prices break below both the 9 and 14 day moving averages and for any sustained move lower we will need to see the 1.20 region broken once again. In the short term these two combined candles provide an excellent opportunity to enter small short positions for intra day trading, which could be extended into overnight medium term trades should the price action of this morning continue the downward move.
However, all of the above needs to be considered against the backdrop of today’s fundamental news on the economic calendar for both Canada and the US, the first of which is the Core Retail Sales from Statistics Canada due for release in the couple of hours. The forecast is for 0.2% against a previous of 1.3%. Core Retail sales exclude cars and is generally thought to provide a better gauge of consumer spending and is therefore closely watched by the currency markets and currency traders alike. If the actual is better than forecast then this could be good news for the Canadian dollar and we could therefore see a continuation of the price moves seen in this morning’s trading. At the same time we have the unemployment claims being released in the US by the Department of Labor and I have covered these in more detail on the main euro to dollar site. The next item of fundamental news is in Canada with the Bank of Canada Monetary Policy report which is published twice a year and followed by a press conference by BOC Governor Mark Carney, 45 minutes later. The importance of this report cannot be under estimated as it provides a valuable insight into the Bank’s view of economic conditions and inflation, both of which are key factors used to shape future monetary policy, and also influence interest rate decisions. However, with interest rates so low there is little further room for manoeuvre, and it is widely expected that the Bank may announce other fiscal and monetary strategies in a bid to stimulate the economy, and these could include quantitative easing along with other measures. This statement will have a dramatic impact on the usd to cad pair, so be careful in opening any new positions during this release.
Finally we have the natural gas storage figures which are sandwiched for release between these two news items and although released in the US always impact the Loonie more than the US dollar.
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