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IronFX Essential Intraday Comment | 21/08/2015 USD/CAD

• The dollar traded unchanged or lower against most of its G10 peers during the European morning Friday. It was lower against SEK, NZD, AUD, GBP, CAD and NOK, in that order, while it was higher only against EUR. The greenback was virtually unchanged vs CHF and JPY.

• EUR gave back some of its Thursday’s gains, after the French preliminary PMIs for August fell below expectations with the manufacturing PMI staying well below 50. The single currency continued to tumble even after the German and Eurozone figures beat estimates and showed a slight improvement in the economic activity. The big falls across Asian stock markets were rolled into the European markets, which opened lower on Friday. The soft Chinese economic data and the renewed Greek crisis, caused investors to take a more cautious approach.

• Later in the day, from Canada, we get the CPI for July. Expectations are for the headline and the core CPIs to accelerate somewhat, which could support CAD at least temporarily. In the bigger picture though, I would expect the plunge in global oil prices and the weakening fundamentals to weigh on the currency and put it under renewed selling pressure. The country’s retail sales for June released at the same time, are expected to decelerate somewhat, adding further downward pressure on CAD.

USD/CAD traded lower on Thursday, after it hit resistance once again slightly below the 1.3200 (R1) resistance zone. Today, during the early European morning, the pair traded in a quiet mode staying slightly above the support of 1.3040 (S1). Later in the afternoon, we get Canada’s CPI for July and expectations are for the inflation rate to have accelerated. This could push the rate below the 1.3040 (S1) barrier and perhaps open the way for the next support at 1.2950 (S2). Our oscillators support somewhat the notion. The RSI stands marginally below its 50 line, while the MACD, although positive has topped and fallen below its trigger line. Although we may experience a short-term setback following the CPI data, the overall trend remains positive in my view. USD/CAD is trading above both the 50- and 200-day moving averages, and above the uptrend line taken from back the low of the 11th of July. As a result, I would expect a possible pullback to provide renewed buying opportunities.

• Support: 1.3040 (S1), 1.2950 (S2), 1.2860 (S3)

• Resistance: 1.3200 (R1), 1.3250 (R2), 1.3330 (R3)

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