This is another pair that enters the base adjustment mode before entering the new month. After moving up continuously since late September the Canadian Dollar was driven by oil prices and energy shortages, while the movement of the central banks of both countries this week has not yet set a new direction for this pair. At its meeting this week, the BoC kept its interest rate unchanged at 0.25%, but surprised by ending its QE program to enter a new investment phase. The country’s economic growth forecast has been revised down to 5.1% from the 6% forecast in July amid warnings of rising inflation from energy prices and continued supply chain bottlenecks.
Like the BoJ yesterday, the BoC kept its interest rate unchanged at -0.1%, but cut its GDP forecast for this year to 3.4% from the 3.8% forecast in July. It cited sluggish consumption and slowing exports due to supply chain issues.
Key economic numbers to end the week are Canada’s Q3 GDP reading, after a sharp fall in Q2 of -1.1%, below the 2.5% expected by the market and down from the 5.5% seen in the previous quarter.
From a technical point of view the pair has been in correction mode since last week, having made a nearly six-year high at 93.00. On H4, a bullish flag is seen forming with declining momentum. MACD is moving in a narrow range near the 0 line. The RSI is hovering around the 50 level with the first support at 91.70. If it breaks down there will be a next support at the week low at 91.20 and could lead to a short-term downtrend. On the contrary, if the price is able to break through the original high of 93.00 this will confirm the bullish flag pattern and the uptrend will continue.
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Market Analyst – HF Educational Office – Thailand
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