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Series of Bad Messages May Lead to a Weak CAD
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Affected by some unexpected bad messages this week, CAD is expected to weaken repeatedly and likely to have a complete sluggish trend in market.To get more news about WikiFX, you can visit wikifx news official website.
Firstly, Tiff Macklem, the new governor of Bank of Canada, delivered his first speech after taking office that Canada will need more time to recovery its economy, and the Bank will continuously purchase government bonds and maintain a record-low interest rate indefinitely. Tiff Macklem‘s dovish message increased investors’ pessimism about the future market of CAD.
Secondly, US president Donald Trump changed his words again and suddenly announced that they consider to impose 10% tariff on Canadian aluminum products again, which makes Canadian economy even worse.
Thirdly, crude oil prices eased back from a high level due to the continuous recovery in its inventory, which is harmful to CAD.
Fitch Ratings has downgrated Canada‘s ratings to AA+ from AAA for the first time, but the ratings’ outlook are stable. The rating downgrate indicates the deterioration of Canadas public finance and severer recession in economy resulting from the COVID-19 and low oil price.
Meanwhile, the US Fed released a balance sheet with the date of June 24, Wednesday, which presents a total of US$7.13 trillion, a decrease of US$10 billion week-on-week, which is a fall for two weeks in a row. And USDX continues to rise due to its advantage as a safe-haven currency.
In conclusion, CAD has a bad situation at present. If USD/CAD can break upward the resistance of 1.3686 successfully, it has great opportunity to challenge bigger resistance of 1.3850. And the success in breaking the level would lead to a strong USD/CAD again.
[About The Author]
Since 1987, Jasper Lo has been engaged in the financial industry (forex, futures and gold) for more than 32 years and holds forex R.O., securities and futures broker licenses. Mr Lo is an expert in trading forex, precious metals and commodity futures and an basic and technical analyst.
Over the years, Mr Lo won many individual and team sales champion awards, as well as outstanding employee awards. He was invited, as a guest mentor, to the University of Hong Kong, Guangdong Ocean University and Guangzhou Jinan University. And he was also appointed as the chief training consultant by Hantang Securities and Dongguan Securities in China.