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July 13, 2021

USD Isn't The Only Think To Watch This Week

Frank Cabibi

7/13/2021

In the midst of a big week for the USD, we cannot overlook major news for the Canadian dollar. BOC will come out with their monetary policy report tomorrow along with their overnight rate, which will probably maintain at 0.25%. CAD pairs are some of the hardest movers today which is probably due to the anticipation of tomorrow's news and rising oil prices.

Our outlook

The loonie looks stronger than some others, but it is still early in the week, and AUD and USD still have news to report throughout the week. In the longer term though, Canada's jobless rate is very high at 7.8%, 3.6% inflation, and weak GDP of 0.3% leads me to believe that the loonie is not a long term bullish play. Although they have a smaller inflation rate than the US, Canada's GDP is nothing notable compared to the US's GDP growth rate q/q of 6.4%. Australia's employment change is expected to be a mere 19K versus its last month's report of 115K, and unemployment is expected to remain unchanged at 5.1%. The Bank of Japan is set to release their monetary policy report this Thursday while the Japanese government gears up for giving out more stimulus, although the liberal democratic party is calling for an extra 30 trillion yen. This could help the yen in the short term, but overall, Canada's economy remains the stronger one.
USDCAD- looks bullish
AUDCAD- looks bearish
CADJPY- looks bullish

Trade Setups

USDCAD

UC is still in an uptrend from June, and price is up 0.47% on the day. The pair does look like it's pulling back from the highs, and major support is at 1.24867 if price continues to dip. A supportive trend line lies right below should the USD slip during the week.

AUDCAD

AC has been in a channel since early June, and it looks bearish on this 4H timeframe as well. We have an overall downtrend while price hovers around its 200 SMA. Support lies below around 0.92909 and the bottom of the channel.

CADJPY

CJ bounced off support around 88.013 forming its second bottom on the 4H chart and is now heading for resistance around 88.400. A break in this level could lead to a test at higher resistance around 88.906.

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