Chart of the Day USDCAD
USDCAD Potential Reversal Zone - Probable Price Path
USD: The S&P 500 succumbed to profit-taking and slid 0.48% overnight after three sessions of gains, despite the better than expected September consumer confidence data and hopes that the US fiscal stimulus talks would resume today between House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin. The VIX rose to 26.27 while the USD slipped. The UST bond market saw the belly outperform and the 10-year yield at 0.65% notwithstanding a busy IG issuance slate. The 3-month LIBOR edged up to 0.2251% ahead of the month/quarter-end. Meanwhile, global Covid19 deaths have crossed 1 million and New York city businesses saw a 40% jump in bankruptcy filings as the daily rate of positive Covid-19 tests rose above 3% for the first time in months.
The consumer confidence index rose to 101.8 from 86.3 previously, in its biggest surge in 17 years, with the expectations gauge at a 3-month high of 104.0. The Senate has also voted 82-6 to advance the stopgap spending bill to fund the government through 11 December. Meanwhile, the presidential candidate Joe Biden released his most recent tax returns ahead of last nights presidential debate, revealing that he paid nearly $300k in 2019, a debate which was roundly considered an embarrassment to America as the two candidates talked over each other repeatedly and offered very little in the way of policy substance. Separately, Disney will cut 28,000 jobs
CAD: The CAD is more or less unchanged against the USD on the session and, as usual, does not appear to be getting the same sort of support extended to its commodity cousins on the day (with the AUD and NZD up 0.5% or more). Canadian provinces are struggling with a renewed COVID-19 flare up; Premier Ford stated that Ontario was entering a second wave while Quebec has announced that private gatherings are banned and restaurants and bars will be closed in Montreal and Quebec City through most of October. The CAD seems to have taken the news in its stride with other parts of the world also dealing with renewed virus flare ups.
From a technical and trading perspective, the USDCAD is currently probing offers and stops sighted around the confluent resistance zone of symmetry swing and 50% Fibonacci retracement at 1.34, as this area contains the current advance there is scope for donside trend resumption. Bearish exposure should be rewarded on a donside breach of 1.3315, if this price action plays out bears will focus on a retest of the current cycle lows at 1.30 enroute to projected descending trendline support towards 1.28. An upside breach of 1.3435 would negate the near term downside thesis opening an upside extension to test offers and stops to 1.37
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Disclaimer: The material provided is for information purposes only and should not be considered as investment advice. The views, information, or opinions expressed in the text belong solely to the author, and not to the author’s employer, organization, committee or other group or individual or company.
Past performance is not indicative of future results.
High Risk Warning: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% and 75% of retail investor accounts lose money when trading CFDs with Tickmill UK Ltd and Tickmill Europe Ltd respectively. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
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Patrick has been involved in the financial markets for well over a decade as a self-educated professional trader and money manager. Flitting between the roles of market commentator, analyst and mentor, Patrick has improved the technical skills and psychological stance of literally hundreds of traders – coaching them to become savvy market operators!