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Today's Trading Edge: USD/CAD - loonie initially stronger after BOC keeps rates on hold

Posted by Edward Moya on Sep 9, 2015 11:45:55 AM


The Bank of Canada kept its main interest rate at 0.5% and had a slightly optimistic tone with its rate statement.  The Bank highlighted solid household spending, a strong US recovery, a weaker loonie, and the effects of the previous two rate cuts are supporting the current economic recovery. 

Immediately following the rate decision, USD/CAD fell from 1.3245 to 1.3165 and eventually made a session low at 1.3153.  Major support currently resides at the 1.3120 level.  If we continue to see further pressure, price may eventually target the 1.3065 - 1.3025 area.  It is around that zone that we could see the formation of a bullish butterfly pattern. 

If momenutm indicators regain their bullishness, we could see a rally towards recent resistance from the 1.3310 level.  If the US dollar becomes excessively strong, we could see price target the 1.3550 region.  

The Trade: Sell USD/CAD at 1.3250, with a stop loss at 1.3270, and a take profit at 1.3065.  The risk/reward ratio is almost 1:4.

Edward J. Moya
Senior Market Strategist
World Wide Markets Online Trading   Click to edit your new post...

Topics: Bank of Canada, USDCAD, Cad, Canadian

 

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