USD/CAD Accelerates Higher on Disappointing Canadian GDP

Technical Sentiment: Bullish

Key Takeaways

• Canada Gross Domestic Product came out at 0.0%, well below the 0.2% consensus;
• Raw Materials Price Index fell -.2.2% in September;
• US Dollar continues its rally higher against all counterparts;
• USD/CAD eyes 1.2770 as price leaves channel boundaries behind.

The markets remain extremely skewed in favor of the US Dollar, leaving nothing on the table for short term traders betting on temporary corrections. Despite crossing path with a strong resistance during overbought conditions, USD/CAD seeks to hit (and maybe exceed) 2014’s High at 1.2770 as soon as possible.

 

Technical analysis

Disappointing Euro data left traders with no alternative other than to continue buying the US Dollar to new highs. This triggered a small price rally in USD/CAD even before the Canadian Gross Domestic Product release was out. After the release, the Canadian Dollar shed whatever intraday bullish bias was left, quickly losing ground against all of its counterparts.

USD/CAD is trading around 1.1182 as the 9/30 U.S. trading session is about to begin, above Monday’s High and the resistance trendline of the bullish channel formed since July. Although Stochastic remains at extreme overbought levels, a technical top is unlikely to form while economic conditions favor USD gains more than anything else.

20^th March 2014 High at 1.1277 remains the main target in the coming days and week. Buyers are likely going to stall in this area at first, maybe even decline to price in a Higher Low, after which the uptrend is expected to resume climbing towards 1.1450, where the next area of interest can be found.

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Prepared by Alex Z., Chief Currency Strategist at Capital Trust Markets