The Canadian dollar remained largely unchanged against the USD as a lack of domestic data left the market sitting on the sidelines ahead of key U.S inflation data due out on Friday. The loonies recent surge to a 30-year high was supported by a combination of upbeat economic data, higher commodity prices, expectations for Bank of Canada rate hikes, merger-related interest and a weaker U.S. dollar. Yesterday, Bank of Canada Governor David Dodge reiterated that interest rates are likely to rise and said the Canadian dollar's recent gains have been faster than expected. The Bank of Canada has left its overnight rate steady at 4.25% since May 2006 but is widely expected to hike rates at its meeting in July and, possibly, September.


The selling point is at 1.0685; triggered by the breaking of primary trend line and failure to reach higher than the previous peak of 1.0692; the market swings and change the direction of the trend.

- Fibonacci retracement 61.8% represents the take profit at 1.0629
- Fibonacci retracement 23.6% represents the stop loss at 1.0711

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages above the zero line. The shorter term moving average is faster than the long term and is pointing downwards with a break of zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the trend is down and breaks the 70% line.

The zero line of the ROC (Rate of Change) is very important to understand the strength of the market and as we see on the graph; it breaks the zero line and moves downwards. We should always look at the trend line; and in this example it breaks the primary trend. For the momentum oscillator we have to concentrate at the zero line and the trend of the oscillator.

Most of the indicators show us the weakness of the USD against the Canadian dollar and the reversal of an up trend that has happened the last week.

By Finotec’s professional analyst,
Tony B

dealingdesk@finotec.com