The Canadian Dollar (CAD) is expected to see increased volatility, as markets await resolution on the North American Free Trade Agreement (NAFTA) negotiations and the release of key economic data on Friday. Today is the deadline set by House Speaker Paul Ryan for a notice of intent to sign a deal that could be passed by the current Congress by the end of the year. Indications are that a deal is unlikely to be agreed today but if there is a resolution, it will be positive for CAD. Inflation and retails sales data will be released on Friday and, with the absence of substantial US figures, the CAD’s next move will depend on this publication. The focus will be on the Core CPI Year-on-Year data, which is expected to be unchanged at 1.4%. A slowdown to 1.3% will likely be bullish for USD/CAD, while a reading of 1.5% or more would be bearish for the pair.
USD/CAD
In the 4-hourly time frame, USD/CAD is stalled at the 50% retracement of the April lows near 1.2760. A break of this level would open the way to declines towards the 61.8% retracement at 1.2706, followed by trend line resistance near 1.2660, with some immediate support at 1.2730. A bullish reversal will find upside resistance at 1.2800 and 1.2825.
On the daily chart, GBP/CAD is testing support at 1.7240. A break of this level could see continued downside towards the 50% retracement of the August 2017 lows at 1.7120, followed by 1.6820. On the flip-side, a bullish reversal will find resistance at 1.7360 and then 1.7430, at the ascending trend line.
By Edward Anderson, Financial Analyst, Forex Broker, FxPro