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USDCAD: Targets 1 & 2 Hit as USD Ebbs

Market Analysis

USDCAD, Daily              

USDCAD: Yesterday I wrote..”The breach and break of the 20 DMA yesterday triggered our SHORT position at 1.2930 near term Target 1 at 1.2875 and Target 2 below the recent 23.6 Fibonacci level and set at the two week ATR 1.2835.  Further down support arrives at the August low 1.2770 and the June low at 1.2690.

The weak US ISM Non-manufacturing PMI report undermined the USD yesterday and resonated with the sub-forecast jobs report on Friday and also meant that Fed expectations cycled back towards the no-case-for-a-September hike. This weakness in the USD allowed our USDCAD trade to hit both Target 1 and Target 2 for a short-term net gain of 95 pips. Although this trade is closed the BOC announcement later today and the Canadian August employment report on Friday is unlikely to significantly change the current USDCAD sentiment and the August low of 1.2770 cannot be ruled out.

 

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