Canadian Dollar Forecasts: GBP/CAD, EUR/CAD and USD/CAD in Focus
Latest technical projections for the three main Canadian dollar crosses we follow.
CAD is flat this morning against most major currencies, however down against the GBP, EUR and USD.
“Again no domestic news out of Canada as CAD relies on geopolitical events and the broadly strong USD for any movement. The sole event this week is tomorrow’s speech from council member Schembri,” says a note from currency brokers Olympia Trust.
Big news out of the US mid-week saw final GDP numbers being reported - GDP came out right at the expectation of -0.2% pointing to a slight contraction in the US economy.
Nevertheless, the USD is up half a cent over the CAD as the broader commodity dollar complex suffers.
We are seeing the CAD’s brethren NZD and AUD also suffering which gives us an overall picture that we could see lower CAD levels in coming days.
Pound to Canadian Dollar Forecast: 2.02 Projected?
The British pound to Canadian dollar exchange rate (GBPCAD) is quoted at 1.9496 on the inter-bank markets while high-street banks are seen transferring funds at an average rate of 1.8950.
Independent FX providers are offering up to 5% more FX by quoting closer to the market around 1.9262.
Analyst Shaun Osborne at TD Securities has confirmed his bank’s bullish conviction on sterling v Canadian dollar in the longer-term:
GBPCAD closed softly yesterday, completing a bearish reversal pattern on the daily chart, as we thought it might. But the market has bounced sharply so far today and it has regained the 1.95 area with relative ease.
“New cycle highs would negate the bearish developments from earlier in the week and keep the market on track for a push higher. We remain high conviction GBPCAD bulls and we continue to look for limited downside potential for the cross overall. We retain a bull target of 2.00/2.02.”
Euro to Canadian Dollar Projection: Upside risk to the low 1.46 rea
The wholesale market prices the euro to Canadian dollar exchange rate (EURCAD) at 1.3880 while our typical consumer-focused bank average suggests rates being offered closer to 1.3336. Independents are seen around 1.3783.
Concerning the outlook, TD’s Osborne reckons:
“We noted that while EURCAD looked weak yesterday, support in the 1.3760/00 area had been very resilient. It remains so and while the support zone holds (essentially price is retesting the neckline trigger for an inverse Head & Shoulder low/reversal which implies upside risk to the low 1.46 area in the next 3-6 months), we lean a little more constructively towards the outlook (even if conviction is low).
“Trend momentum is the missing element that would bolster confidence in a rally though; studies are mixed across as range of timeframes and the early June rejection of trend resistance rather suggests the broader downtrend prevails for now. We might need to push (and hold) above 1.40 to really get some serious topside traction.”
US dollar to Canadian Dollar Outlook:
The markets are pricing the USD v CAD exchange rate at 1.2410 at the present time.
Looking at the most recent mid-week action TD Securities have expressed surprise at the ease with which price has carved through the belt of resistance in the upper 1.23 area so far today; TD believe the price action on USDCAD looks constructive on the short-term charts and while trend momentum looks soft, spot could retest the low/mid 1.25s now.
Looking at the longer-term picture Osborne says:
“Overall price action yesterday was a little disappointing from our (USD-bullish) perspective. The USD rally above the 28-day MA failed to hold and, by giving back all of the intraday gains through the close of trade, the USD left a negative print on the
daily candle chart (‘gravestone” doji).
“At this point, we are not too concerned that the signal implies as lot of downside risk. In fact, with the market pushing through 1.2385 at writing, the signal looks rather irrelevant. Note trend resistance just under 1.25 is clearly at risk.”
