Canada-specific data is in short supply over coming days but there are significant clues written in the charts which will provide us with guidance.
It is not then till Thursday that anything particularly high-tier hits the wires for CAD but on Thursday we see Oil Inventories come in, which are still expected to show an over-supply surplus, which could impact on Oil, and because of CAD’s high correlation also on the loonie.
Oil is currently going great guns as traders pump it higher on news that the Saudi Arabia and Russia are planning to cut their supply; ultimately if there is more positive news on this front it could also help support the currency going forward.
On Friday there is some major tier one data in the form of the Unemployment Rate (7.1% previously), Net Change (27.6k prev), Full-Time Employed (-6.4 prev) and Ivey Purchasing Managers Index in Jan (49.9 prev).
GBP/CAD Forecast
The pair has reached its short-term target at 2.0000 and is currently churning in the 1.99s.
The 2.0000 level is a considerably psychological area of support and probably not the ideal place to join the down-trend.
There may be a strong bounce from here, or possibly the exchange rate will simply continue to the next major support level which lies at the 1.9850 lows.
The 50-week MA lies near the key 1.9732 lows and provides a tough double tier of support.
Then below that is a major trend-line at 1.9450.
Given that there is so much support, I would ideally want to see a break below the trend-line for confirmation of more downside, with a break clearly below the trend-line at around 1.9450 – so below 1.9350 leading to a move down to 1.9000.
Nevertheless, RSI is turning lower bearishly, signalling more bearishness.
USD/CAD Forecast
The USD/CAD continued lower after positing 3-black crows after completing a measured move.
It has now broken cleanly below the R1 Monthly Pivot, and is moving down towards the next target at 1.3858.
The move down has formed an a-b-c corrective formation, with the C leg reaching the 61.8% Fibonacci extension of leg A, which is the minimum expectation for the end of C.
The dollar-loonie will probably continue even lower, particularly as there is a bearish engulfing candle-stick pattern on the weekly chart, indicating further downside, at the very least in the short-term.
A break below the 1.3947 lows would probably confirm a move down to the 1.3858 target at the 50-day.
The MACD indicator is moving lower, quite steeply, and supporting the mini-down-trend and arguing for lower exchange rates in the short-term.
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