Currency Analysis Report 8/21/18 - Don't Fiddle In The Middle With The "Loonie"

The Canadian dollar also known as “The Loonie” because of the loon bird that appears on the $1 Canadian coin. The Canadian dollar is the 7th most traded currency in the world in which many banks across the globe keep Canadian dollars as a reserve currency.

The Lonnie has held its own against the US dollar this year, down 4.5%, while the Euro, Pound and Australian are down -5.3%, -5.9% and -6.9%, respectively against the US dollar.

The Bank of Canada has failed to keep up with the US Federal Reserve, despite rising inflation and raising rate hike expectations. But if oil continues to decline, they will continue to lag against the US Federal Reserve. Also, pay attention to strong positive correlation between the price of oil and the Canadian dollar.

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The price of oil is strictly a supply and demand dynamic. Oil trends to accelerate upwards during the last leg of an economic cycle, but the trade war between the US and China has already put a temporary ceiling on oil prices.

Canada’s economy grew by 0.5% in May, the biggest rise in a year, so an ease in the tariffs tension should allow their economy to continue to grow. Lets go to the charts to see where the Canadian dollar is headed next.

Monthly Chart (Curve Time Frame) - monthly supply is 0.80650 and the monthly demand is 0.73100.

Weekly Chart (Trend Time Frame) – the trend down which is confirmed by price making lower highs and lower lows with the weekly demand at 0.7400.

Daily Chart (Entry Time Frame) – the chart suggests to play the extremes, wait for price to get to the daily supply or weekly demand before considering a trade set-up.

This post is my personal opinion. I’m not a financial advisor, this isn't financial advise. Do your own research before making investment decisions.

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by rollandthomas

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