USDCAD Analysis – November-21-2023
Today’s USDCAD analysis reveals that the currency pair trades near the bullish flag’s lower boundary. In the USDCAD daily chart, the market appears to be consolidating in this area, as indicated by the ADX remaining below the 20 level. The super trend indicator and the rising flag further support this bullish trend. As long as USDCAD stays above the 1.3678 mark, the bullish trend remains intact, and the pair might likely rise to retest the 78.6% Fibonacci retracement level. It’s important to note that this scenario will gain additional momentum if the ADX climbs above the 20 level.
Conversely, should the bears push the pair below the bullish flag, the consolidation could extend down to the 0 level on the Fibonacci scale. A breakdown below this level would signify the end of the bullish trend, potentially leading to a trend reversal in the USDCAD pair.
USDCAD Fundamental Analysis
Reuters — The Canadian stock market witnessed modest but positive growth at the beginning of the week. The S&P/TSX Composite index closed Monday with a 0.3% increase, reaching 20,246 points. This rise mirrored the upward trend in Wall Street, spurred by a drop in bond yields. These lower yields are creating more favorable financial conditions for businesses.
Investors are keenly awaiting the upcoming inflation data, which is expected on Tuesday. There’s a widespread belief that this data will reveal a significant slowdown in the rise of Canadian prices. If this turns out to be accurate, it could mean that the Bank of Canada might pause its interest rate hikes, a move eagerly anticipated by the market. The banking sector showed a solid performance, continuing its momentum from the previous week. Notably, the Royal Bank of Canada (RBC) reached an 8-week high with a 0.5% increase, and TD Bank also saw a similar rise. In the technology sector, shares performed even better, averaging a 0.9% gain, tracking the success of their counterparts on the Nasdaq.
Energy and International Markets
Energy stocks also had their moment in the sun, benefiting from rising crude oil prices. Canadian Natural Resources saw its shares go up by 0.6%. However, not all energy stocks enjoyed gains; Suncor experienced a slight dip, losing 0.7%.
Turning our eyes to China, the Shanghai Composite experienced a minor decrease of 0.01%, closing at 3,068 points, while the Shenzhen Component fell a bit more, by 0.26%, ending at 9,997 points on Tuesday. This slight retreat in the Shanghai market comes after a month of significant gains. It appears that investors are taking a step back to secure profits and are also cautious due to the lack of new market-driving news from China.
Several companies in the Chinese technology sector saw their stock values dip. IEIT Systems, OFILM Group, iSoftStone, Eoptolink Technology, and Shenzhen Fastprint all recorded losses, ranging from 2% to 5%. On a more positive note, the real estate sector in China received a boost. This came following reports from Bloomberg that Chinese regulators are working on financial support measures for a select group of 50 developers.