Canadian Dollar Forecasts: CAD Technicals vs Pound and Euro and USD

Forecasts for the Canadian dollar (CAD) confirm the currency is likely to remain under pressure against the US dollar for some time yet.

However, it is against the British pound and euro where the best chance for advances currently lie suggests recent research issued by TD Securities.

Indeed, it would appear that at the current time the CAD is taking full advantage against a wonded British pound and euro:

- The pound sterling to Canadian dollar exchange rate conversion: GBP/CAD is 1.09 pct lower at 1.7852.
- The euro to Canadian dollar exchange rate conversion: EUR/CAD is 0.70 pct lower 1.4045.
- The US dollar to Canadian dollar exchange rate: USD/CAD is 0.30 pct lower at 1.1303.

Please note that the above quotes will attract the charge of of a discretionary spread by your bank. If you are looking to make international payments we suggest being quoted by an independent provider. By tapping the wholesale markets they can offer up to 5% more currency in some instances.

Furthermore, you should avoid negative currency moves by ensuring the correct risk controls are in place.

Canadian Dollar Latest

The CAD's weeklong rebound from five-year lows continued on Wednesday though weak oil prices kept it on a vulnerable footing.

"The loonie last week hit a multiyear low in the C$1.14s, hurt by oil’s collapse and bullish momentum behind the greenback," says Joe Manimbo at Western Union, "surprise Canadian job growth on Friday helped the loonie stabilize. A lack of much Canadian data until inflation figures on Nov. 21 suggest the loonie may keep within its recent range."

British Pound to Canadian Dollar Forecast

Sterling is caught in nothing short of a rut against CAD, as noted in the latest forecast note on GBP/CAD issued by Shaun Osborne, analyst at TD Securities:

"GBP/CAD can generate almost as much upside follow-through interest as it can downside follow-through interest at the moment; that is to say little or none at all. For all intents and purposes, this market remains range bound as well; well-defined support in the upper 1.78 area may be tested again sooner or later after the past week’s failure in the mid 1.82s (200-day MA at 1.8259 currently serves as a market cap).

"We remain broadly bullish here but low-conviction prevails in the near-term."

Euro to Canadian Dollar Forecast

EURCAD came to a dead stop last week as the market closed Friday exactly where we started on Monday.

According to Osborne:

"That has been the story of the last month or little more, with the broader range trade between 1.40/1.44 holding the EUR easily and weak, short-term momentum signals suggesting little risk of a break out any time soon.

"EURCAD should trade with a softer bias below moving average support and we still rather expect a downside resolution to the current consolidation (we think the October rejection of 1.44+ levels keeps the broader focus on a return to the 1.35/1.38 range in in weeks/months ahead).

"But we don’t expect a significant move out of the trading range any time soon."

US Dollar to Canadian Dollar Forecast

USDCAD hit a new five-year high last week and nearly broke 1.15.

However, that move is not at all exceptional when placed alongside the moves in other USD pairs.

According to Greg Anderson at BMO Capital there were two distinct moves in CAD that merit mentioning:

"First, the five-year high was hit on Wednesday during early London trading as WTI oil fell below $77/bbl. The other major move occurred on Friday when USDCAD fell by 0.9% in response to Canada’s Labour Force Survey, which showed far better results than anyone in the market had expected. CAD gained sharply along all key crosses."

Turning to the outlook, Shaun Osborne at TD Securities notes while the longer-term is positive for the USD, there may be near-term pressure:

"Heavy price action late last week (highlighted) on the daily USDCAD chart adds to the impression of a market that is poised to test a little lower at least. The mid-week “shooting star” and Friday’s bearish outside range signal both suggest the risk of a reversal in the USD’s recent gains.

"Losses could extend to the bull trend base at 1.1189 in the next few days but we look for support (reinforced by the 40-day MA) to hold. The broader trend remains bullish and we think modest USD dips are a buy."