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USDCAD – JULY 30TH 2014

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July 30th 2014 8:54am GMT, London UK
 

  • Currency Pair: USDCAD
  • Timeframe: H4 (Hourly Chart)
  • Trading Recommendation: Seek short entry positions on rallies above 1.0860
  • Take Profit Target: 1.0710 for a potential downward move of 150 pips
  • Stop Loss: 1.0900 for a potential upward move of 40 pips

USDCAD

The USDCAD rebounded from an intra-day low of 1.0620 which it reached on July 3rd 2014. This intra-day low was formed after a severe correction took the USDCAD from an intra-day high of 1.1278 which it reached on March 20th down 658 pips. A short-covering rally has resulted and met new long orders which pushed the USDCAD to current levels, but the steep move higher also resulted in the formation of a rising wedge formation which is a bearish chart pattern.

Traders are advised to monitor price action very closely as a breakout and reversal in the USDCAD could result as soon as during today’s trading session. The rising wedge formation is expected to pressure price action lower which could reverse until it meets initial support from the lower band of a bullish price channel, the rising wedge formed inside this bullish chart pattern, around 1.0800. A breakdown is expected to take the USDCAD down to its next support level of 1.0710.

The following economic reports are likely to have an impact on the quote currency, the Canadian Dollar, of the USDCAD currency pair:
Industrial Product Price Index – The Industrial Product Price Index is expected to show an increase of 0.2% in June as compare to May. This would mark a welcome turnaround from the 0.5% contraction reported in the previous report.

Raw Materials Price Index – The Canadian economy is heavily depended on raw materials and commodities and the Raw Materials Price Index is expected to show an increase of 0.6%. This would more than reverse the 0.4% contraction reported in May.
The following economic reports are expected to impact the base currency, the US Dollar, of the USDCAD currency pair:

ADP Report – The ADP report covers private sector jobs growth and has become a very important indicator for the following non-farm payrolls or NFP report. Economists expect the ADP report to show an increase of 230,000 new jobs in the private sector. This would mark a sharp slowdown as compared to the 281,000 jobs created in June.

GDP – Traders should closely monitor today’s GDP report for the second-quarter after first-quarter GDP plunged 2.9% on an annualized base. Expectations for second-quarter GDP stand at 3.0% which may be slightly too optimistic judging other economic data reported during the second-quarter. Personal consumption is expected to rebound to 1.9%, almost doubling the 1.0% reported in the first-quarter. Core Personal Consumption Expenditure is also expected to rise by 1.9% while the Gross Domestic Product Price Index is expected to show an increase of 1.8%. This would mark improvements over the first-quarter increase of 1.2% as well as 1.3% for the respective indicators.

Federal Reserve Interest Rate/Stimulus Announcement – The two-day US Fed meeting which started yesterday will end today and Fed Chief Janet Yellen will make the announcement late in the US trading session. Traders already account for no change in interest rates which are expected to remain at 0.25%. In addition traders expected a reduction of $5 billion in the pace of Mortgage Backed Securities or MBS purchases to $10 billion per month while the pace of US Treasury Purchases is also expected to be decreased by $5 billion to $15 billion per month. This would leave the third installment of economic stimulus or Quantitative Easing Three, QE3, at $25 billion per month.

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Daniel Gant
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Daniel Gant

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My strategies have been maintained and reworked for the last four years. Win loss accuracy and a stable method of volume production has insured my clients inside my personal portfolio success, not to mention the education, guides and management sessions that I teach daily.

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