Breaking News
Get 40% Off 0
Is NVDA a 🟢 buy or 🔴 sell? Unlock Now

Canadian Dollar Week Ahead: Temporary Gains Forecast

Published Nov 20, 2023 10:05 Updated Nov 20, 2023 10:11
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
Canadian Dollar Week Ahead: Temporary Gains Forecast
 
USD/CAD
+0.21%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GBP/CAD
+0.51%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
CL
-2.60%
Add to/Remove from a Portfolio
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

PoundSterlingLIVE -

  • GBPCAD trending higher
  • But some consolidation is possible this week
  • CAD tipped to respond positively to oil price recovery
  • CA inflation is this week's CAD highlight

Any rebound in oil prices combined with an upside surprise in Canadian inflation data could offer the Canadian Dollar some support against the Pound and U.S. Dollar over the coming days.

The Canadian Dollar has been under pressure for a number of weeks now and screens as the biggest loser in the G10 complex over one month, with losses associated with a decline in global crude oil prices.

Kristina Clifton, a strategist at Commonwealth Bank, says the Canadian Dollar will remain heavily influenced by oil prices, and any OPEC-inspired recovery in oil prices could offer CAD some support.

"The OPEC+ meeting on 26 November poses an upside risk to oil prices, which will in turn help oil prices and CAD recover," she says in a note.

Beyond oil, this could prove to be an exciting week from a CAD perspective, given the release of inflation numbers on Tuesday, manufacturing figures on Wednesday and retail sales on Friday.

"Another decline in Canadian inflation will reinforce our view that the Bank of Canada’s policy interest rates have peaked," says Clifton.

Canadian CPI inflation is the calendar highlight of the week and is expected to read at 3.2% year-on-year in October, down from 3.8% previously. The 'common' measure of CPI - much favoured by the Bank of Canada - is expected at 4.3%, signifying stubborn domestic price pressures.

Should numbers come in below expectation, markets will bring forward Bank of Canada rate cut expectations, weighing on the CAD.

Such an outcome would boost the Pound to Canadian Dollar exchange rate, which retains a constructive setup with a well-defined uptrend being identified to be guiding price action since September.

GBPCAD remains above the 200-day moving average, which signifies it is in an uptrend; therefore, any setbacks will be considered temporary.

Setbacks are certainly possible, given the context of the rally flirting with overbought conditions. The Relative Strength Index (RSI) in the lower panel of the above chart is approaching 70, which is the line that signals a move has overextended.

For now, any correction from oversold conditions would likely come in the form of a benign consolidation by GBPCAD.

The trend suggests a move back towards the 2023 highs located around 1.7320 is possible before year-end.

Turning to USD/CAD, the reversal from last week's high near 1.3775 is showing some signs of technical momentum that favours CAD on the intraday chart, according to analyst Shaun Osborne at Scotiabank.

He says the exchange rate should see firm resistance around 1.3750/60 intraday and broader USD losses in the next few days should mean USDCAD has another look at key support at 1.3655/60.

"A break below there should drive more CAD gains in the short run to the 1.34/1.35 range," says Osborne.

An original version of this article can be viewed at Pound Sterling Live

Canadian Dollar Week Ahead: Temporary Gains Forecast
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email