Tuesday, October 21, 2014

USD-CAD Analysis (21 October 2014)

Fluctuating within the current position level 1.1283 the pair fighting to break 1.1406 resistance level. There is still plenty of room for upward movement as the MACD indicator in the monthly time frame still rising upward. We also knows that the current position level is near its lowest historical level and by technical instinct it should initiate upward movement to find its correction point ideally at 1.1758

However not to forget on the fundamental factors the USD has been struggling on economic challenges after that still going on since Ben Bernanke era. For the past 3 years since 2011 and even now the US economic data yield consistent data which is below the market forecast despite of the upbeat booming sentiment that we heard and read from the news. Major wars going on in some part of the middle east i.e. Lybia, Syria, Iraq, and some African countries also have some impact to the US Dollars prospect as the funding for the wars involved billions or maybe trillions of dollar debt incur by the US government.

Apart from that Canadian economy is performing better than the US. This is shown on the positive Canadian's economic data which consistently yields better result than forecasts for the past 3 years. In terms of interest rates comparison Canada (1.00%) vs US (0.25%) both economy have plenty of improvement needed. Historically the US Dollar out performed Canada was since 1992 until 2003 despite the US interest rates is relatively always lower than of the Canada as shown on the graph below but that dominance has shifted to the Canadian dollar since 2004 until presents.

As far as we know currently sitting near its lowest historical level the USD-CAD is trying to move up as least for correction but the fundamental challenges such as wars and poor economic data from the US could prevent the pair from its intended direction and possibly keep it moving sideways. Anything can happen and it depends on the sentiment of the big players for now.

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