USD/CAD – Further weakness before uptrend resumes?

on Aug 29, 2013
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**iNVEZZ.com, Thursday 29 August:**

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Johan Grading (twitter: @johangradin) was happy to provide iNVEZZ readers with another update of his USD/CAD fractal analysis, which over the past five months has proven its worth. The current price structure of the pair closely replicates the initial bullish wave that started in September 2012 and repeated from March to July. Thus, Gradin conjectures that the USD/CAD is stuck in a bullish continuation pattern. However, before an eventual resumption of the uptrend we may see further downside and volatility similar to February 2013. The comparative suggests a bull trap before any continuation of the long-term strength of the US dollar against its Canadian peer.

!fm[](/uploads/story/5167/BSyaXsuCcAAIKQ6.png)

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The USD/CAD is currently holding just around the key level of 1.05, 0.12 percent higher for the day. Today’s trading range is so far a quiet 20 pips and volatility has diminished before the major news flow from North America around the New York morning bell.

In the US today at 13.30 BST, the second estimate of GDP for Q2 will be released together with initial jobless claims for last week. The median economists’ estimate is for economic growth of 2.3 percent in the last quarter after the first forecast of 1.7. However, the GDP Deflator is widely anticipated to rise by 0.7 percent matching the initial prognosis. After the previous worse-than-expected release of 336,000 Unemployment Claims, the market consensus is for a decline by 7 thousand in the week until 23 August.

At the same time the Canadian Current Account for Q2 will be reported, with estimates for a widening deficit to C$14.8 billion from the prior shortfall of C$14.1 billion. Market observers will closely monitor the balance of transactions between the North American countries as a guide for the future path of the pair.
Also at 13.30 BST, Canada’s Raw Price Materials Index and Industrial Production Price Index for July m/m are scheduled to be reported. Pundits forecast an increase in RPMI to 0.8 percent from June’s 0.3 percent, while expectations for IPPI are for growth of 0.3 percent, identical to the prior period.

The USD/CAD will also want to factor in the release of US Natural Gas Storage for last week at 15.30 BST, with the Canadian economy strongly dependent on its large energy sector. After yesterday’s bigger-than-expected increase of US Crude Oil Inventories, analysts forecast a rise of 63 Bcf, following the prior upswing of 57 Bcf. A closer look of underground storage compared to the last five years shows that stocks were 238 Bcf less than this time last year and 44 Bcf above the 5-year average of 3,019 Bcf. The latest surge in energy prices as a result of Middle East uncertainty and the tendency for storage to peak before the winter season may encourage a greater rise in US Natural Gas Storage.
!fm[](/uploads/story/5167/69.png)

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USD/CAD – BoC Deputy Governor says tapering is bearish for Canadian dollar Currency Briefing: What makes the euro a safe haven currency?

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