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    IronFX Intraday Comment | USD/CAD | 21/10/2015

    • The dollar traded mixed against its G10 peers during the European morning Wednesday, in the absence of any major market moving events. It was higher against AUD, NZD, JPY, CHF and CAD, in that order, while it was lower vs SEK and GBP. The greenback was virtually unchanged against EUR and NOK.

    • The Canadian dollar was slightly weak ahead of the Bank of Canada policy meeting later in the day. At their September policy meeting statement, Bank officials gave no hint that further accommodation was being considered. Overall, they seemed to be satisfied with the impact of their recent reduction in rates and happy to remain on hold for some time. As such, we don’t expect any action at this meeting, but we expect the Bank to keep alive the scenario for further cuts in the foreseeable future. That could leave CAD vulnerable in the medium term. In the short-term however, the majority win in the Federal election early this week, along with an optimistic statement and a positive tone in the press conference following the decision, could provide short-term CAD-long opportunities, in my view.

    • USD/CAD traded higher during the European morning Wednesday, after it hit support at around 1.2965 (S1). As long as the rate is trading above the short-term uptrend line taken from the low of the 15th of October, I would consider the short-term bias to be cautiously positive. However, I believe that a clear break above the 1.3065 (R1) obstacle is needed to complete the trend reversal as we could experience a minor setback following the BoC decision. A break above 1.3035 (R1) could trigger the completion of an inverted head and shoulders formation and could confirm the positive divergence between our oscillators and the price action. Something like that is likely to initially aim for the next resistance at 1.3075 (R2). On the daily chart, I see that on the 16th of October, the pair rebounded from the medium-term uptrend line taken from the low of the 14th of May. This keeps the longer-term outlook positive as well and increases the possibilities for the pair to trade higher in the foreseeable future.

    • Support: 1.2965 (S1), 1.2935 (S2), 1.2900 (S3)

    • Resistance: 1.3035 (R1), 1.3075 (R2), 1.3135 (R3)

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