Weak USDCAD Continued as US GDP Grows Below-Forecast 2.6%
By: Eddy Peng Jan 29, 2018
Weakness in the dollar continued, with the greenback down 0.34 percent against a basket of major currencies on Friday, the worst week since May after comments from senior U.S. officials last week backing a weak currency.
The USD/CAD extended its loss on Friday by 0.67 percent to close at C$1.23085 per dollar, a record low since Sept. 2017, as the Commerce Department showed that the U.S. economy expanded at a slower-than-projected pace (2.6%) in the fourth quarter. It was dragged by trade and inventories, offsetting robust growth in consumer spending and business investment that signals solid momentum entering 2018. On the other hand, the Canadian economy maintained in a good condition as CPI has increased 1.9 percent in December, same as expected.
According to the daily chart, the broader outlook for the USD/CAD remains a bearish market as intraday mute change doesn’t seem to change current momentum, with looking at a key resistance provided by Fibo (61.8%) ahead.
To predict the movement of the next few days, even though the pair already broke out a retracement level (61.8%), the combination of the Relative Strength Index and MACD applied are supportive to current bearish momentum, as they will be in a bullish divergence if the pair halt its loss in the next few days. Then the bullish divergence provided by those two indicators will lead the way to a reversal.
Figure 1: USDCAD Daily
The U.S. dollar has fallen for seven weeks straight, its worst showing in over a decade. To attempt to have a good decision on trading this week, Investors should keep focus on upcoming Fed rate decision and U.S. jobs data, to see whether they will lift the U.S. dollar or not.
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