The Canadian dollar has been growing against the USD for the whole week. On Thursday the USDCAD rate has reached the lows of 0.9912 since this May. Strengthening of the Canadian dollar was caused by high prices for raw materials and strong economic performance in Canada. The governor of the Bank of Canada, Mark Carney said on Thursday that economy of the country has not been significantly affected by the crisis and may require tightening in the monetary policy. This statement inspired confidence in the “bears” and the rate of USDCAD continued downward movement. Currently the pair traded in the narrow channel of 0.9927-0.9910.
2. Important levels (Support and Resistance)
Initial resistance level: 0.9927; support level: 0.9910. It is most likely that the Canadian dollar will continue to strengthen next week. In case of breakdown of the support level of 0.9910, the price will continue downward movement to the target level of 0.9892, if this level is broken through, the price will move to the level 0.9856. Nevertheless we cannot rule out temporary correction of the rate. If the “bulls” breaks down support level of 0.9927, upward movement to the level 0.9951will be possible.
3. Best entry/exit points
In case of the first scenario, it will be reasonable to place an order for sale at the level of 0.9904 with protective order around 0.9942. Breakdown of the resistance level of 0.9927will be the signal for opening long positions, in this case it is better to enter the market at the level of 0.9936 with protective order around 0.9897.
4. Supporting facts
Currently the Canadian currency is supported by high prices for raw materials. Index CRB has been growing for over two months and the price of a barrel of crude oil BRENT has reached 113 USD this week. In general Canadian economy continues to grow moderately; however problems still remain. In May GDP grew by 0.1%, which was below expectations, foreign trade deficit increased by 1.02 billion CAD. It should be noted that Canadian economic statistics will be made public on Friday, including unemployment rate and number of jobs. If statistics will be positive, it will contribute to further strengthen of the Canadian currency.
5. Technical indicators
Moving average line of the indicator on the four-hour chart “Bollinger bands” shows that descending trend will continue; however price chart is below the line that is giving a chance to open short-term position for buying. Histogram MACD is below the zero line and has not reached its minimum, confirming downtrend in the market.