GBP/CAD – Back to 1.74?

GBP/CAD – Back to 1.74?

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GBP/CAD – Back to 1.74?

Better than expected UK PMI numbers confirmed the bottom in GBP/USD that was days in the making. Manufacturing activity accelerated in the month of May thanks in part to the sharp decline in the currency. Looking ahead, we expect similar strength in the service and construction PMI reports especially given the improvement in consumer confidence. This should foster further gains for sterling, especially versus the Canadian dollar after President Trump killed the NAFTA deal with the request for a sunset clause
that would require NAFTA to be renegotiated in 5 years unless both parties agreed to renew – a term that the Canadians quickly rejected. What appeared to be a done deal is now very much up in the air and until there’s a positive resolution, the Canadian dollar will have a tough time rallying.

Technically, GBPCAD has found its way back to the 20-day SMA and given the strength of the past 2 day’s moves, we expect the pair to blow past this resistance level on its way up to 1.74.

GBPCAD Breaks Down, More Losses Ahead?

GBPCAD Breaks Down, More Losses Ahead?

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GBPCAD Breaks Down, More Losses Ahead?

We believe that the Canadian dollar will experience further gains in the week ahead. Although USD/CAD hit a high of 1.29 this week, it rejected that level on the prospect of a NAFTA deal and less dovish comments from the Bank of Canada. At their last policy meeting, BoC Governor Poloz and Deputy Governor Wilkins outlined their dovish bias but their tone seems to have changed this past week. In a speech to the Financial Committee, Poloz said inflation is on target and the economy is close to potential. With a NAFTA deal imminent, we expect the Canadian dollar to outperform in the week ahead as long as GDP, the trade balance and IVEY PMI reports don’t disappoint in a significant way. Although USD/CAD itself looks bearish, we particularly like selling GBP/CAD given the back to back weakness in U.K. data including Friday’s GDP report.

Technically GBP/CAD rejected the 50-day SMA at 1.7950 and now appears poised for a move down to 1.7580, which is where the 20-week and 100-day SMA converge.

GBP/CAD – Headed to 1.76?

GBP/CAD – Headed to 1.76?

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GBP/CAD – Headed to 1.76?

Although sterling traded higher against the greenback today, we believe that it is vulnerable to further weakness as U.K. data worsens. Industrial production rose only 0.1% in the month of February and manufacturing production fell -0.2%. Although the trade deficit narrowed, the decline in exports and imports reflects weakness rather than strength. All of this follows last week’s disappointing PMI reports.
The National Institute of Economic & Social Research also sees GDP growth accelerating to only 0.2% in the month of March, which was less than anticipated. Meanwhile the Canadian dollar rose to its strongest level in 7 weeks vs. the greenback. There was no Canadian data but the sell-off was supported by the price of crude, which hit its highest level since December 2014. Canadian 10 year bond yields are up sharply and with the prospect of a NAFTA deal, the loonie should extend its gains.

Technically, GBP/CAD has support at 1.7800 but if this level is broken, we should see the pair extend down to 1.76. The weekly chart shows the pair’s negative bias after having rejected the 200-week SMA.

GBP/CAD to 1.60?

GBP/CAD to 1.60?

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GBP/CAD to 1.60?

GBP/CAD broke down significantly on Friday and this normally trending currency pair should be poised for further losses. Fundamentally, sterling should remain under pressure. Despite stronger than expected PMI numbers and the rise in U.K. rates, sterling has been unable to rise and in the coming weeks and now the focus will turn to the risk of Brexit. In contrast, the Canadian dollar has responded well to stronger data and should continue to outperform. Oil prices have been on the rise and Canada’s trade deficit turned into a surplus the month of November. This was significantly better than expected because economists were actually looking for a bigger deficit. More than 53K jobs were also created in December (all full time) and manufacturing activity expanded at its fastest pace since January according to the IVEY PMI report. This leads us to continue to expect further gains in the Canadian dollar, particularly against sterling.

Technically there is no major support in GBP/CAD until 1.62 and if that breaks, the currency pair should hit 1.60. The downtrend remains intact as long as the currency pair remains below 1.65.

GBPCAD – Value at 1.6500?

GBPCAD – Value at 1.6500?

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The loonie was on fire today boosted by 4% rally in crude that took the commodity above the $45/bbl level. There is speculation that OPEC may finally arrive at some workable quota, but given the rise in the USD and the need for revenue amongst the Gulf states chances are slim that any accord will hold and that is likely to push crude towards $40/bbl once again.

Meanwhile, cable continues to show relative strength and tomorrow’s UK labor data should show that the employment in UK remains robust. Therefore the GBP/CAD pair which saw a sharp selloff today could represent a near term bargain especially now that it is approaching strong support at 1.6500 level that is likely to bring out the bargain hunters. If UK data continues to impress, GBPCAD could pop right back towards 1.7000 over the near term horizon.

GBP/CAD – Top of the Range?

GBP/CAD – Top of the Range?

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The BoE meeting today ended with essentially a dud for sterling as the pair failed to hold its highs after the central bank admitted that economic conditions were better than anticipated after Brexit. The lingering sentiment in the market however, is that growth will become more problematic as the year progresses and UK becomes more serious in its negotiations to leave the European Union.

The loonie on the other hand may be at the end of it decline as oil appears to be bottoming near the $44/bbl level. Another run towards the $50/bbl level could push USD/CAD towards 1.2800 and that in turn should send GBP/CAD lower as well.

Technically GBP/CAD sees a triple top at the 1.7500 level that has been there most the year and as long as the pair respects that trendline the path of least resistance over the near term horizon is to the downside.

GBP/CAD – Headed to 1.73

GBP/CAD – Headed to 1.73

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GBP/CAD – Headed to 1.73

Tomorrow is a big day for the British pound. Back in July, U.K. policymakers made their plans to ease in August abundantly clear and now that the time has come, sterling has been surprisingly stable. By giving investors sufficient warning, the market had the opportunity to completely discount a 25bp rate cut and the question now is if the BoE will do more. They could cut interest rates by 50bp or they could combine a quarter point cut with renewed bond buying. Given the recent stability of U.K. financial markets, we feel that the Bank of England doesn’t need to send a strong message to the market right now outside of a 25bp rate cut and a stern warning of more easing in the coming months. If we are right, we could see a bigger short squeeze in GBP/USD that will allow investors to reset their short positions at higher levels. The U.K. is not out of the woods, as growth will only slow further in the coming months / years because the U.K. government is simply delaying the inevitable. If they cut by 50bp or restart their bond buying program, sterling will fall quickly and aggressively. The greatest losses could be against the Canadian dollar which has performed extremely well thanks to the uptick in oil prices. $40 appears to a natural bottom with mixed inventory data supporting the move.

Technically, GBP/CAD failed right around 1.7500 today and appears poised for a sharper decline to 1.73 and possibly even 1.7200, where we have the 61.8% Fibonacci retracement of the 2010 to 2014 rally. Resistance is up at 1.7500

GBP/CAD Big Trade Orders 04.28.2016 – LIVE

Swing

5/2 -- Entry lowered to 1.8400, Triggered, Set target at 1.8375

GBP/CAD Big Trade Orders

Place Order to Sell GBP/CAD at 1.8410

Stop at 1.8610

Fundamentally we’ve seen strong gains in sterling and the Canadian dollar but recent economic reports show more underlying strength in the Canada vs. U.K. economy. Canadian retail sales are up, consumer prices increased, manufacturing activity accelerated, over 40k jobs were created in the month of March and the unemployment rate dropped to 7.1% from 7.3%. The U.K. in contrast has reported mostly weaker economic reports ranging from lower retail sales, employment and industrial production. So the downtrend in GBP/CAD should reman intact. Technically, GBP/CAD is one of our most successful ValueTrader currency pairs with only 1 loser this year. This strategy identifies ideal entries in the direction of the trend.

Canadian GDP numbers are scheduled for release on Friday and given the rise in retail sales, we believe the risk is to the upside for the report.

Big Trade Sell GBP/CAD 03.09.16 +25

Swing

BK GBP/CAD Big Trade -- Close at Market (now 1.8906 ) We’ll take the small profit and reload

we hit 1.8910

Sell GBP/CAD at 1.8935 (market)

Stop at 1.9135

The Bank of Canada meets tomorrow and with oil prices recovering and Canadian data turning positive, they have plenty of reasons to be less pessimistic. When the Bank of Canada last met, the Bank of Canada left rates unchanged with Governor Poloz sounding surprisingly optimistic. He was not concerned about a global recession and believes that the weak Canadian dollar will aid growth. Poloz was also encouraged by the economy’s resilience and flexibility and instead of lamenting about the currency’s rapid decline, he said a further fast fall could boost inflation. This month he has even less to be worried about with oil near $35 a barrel, GDP growth accelerating and consumer prices rising. In contrast, the BoE Governor Mark Carney saw a frosty exchange in the UK Parliament testifying on the issue of Brexit. Mr. Carney has tried to remain as neutral as possible in the debate but his clear pro-EU leanings came under strong criticism from pro-Brexit forces in the Parliament and some of the questioning was downright hostile. The market remains at a standstill as the pro and anti Brexit forces remained even split for now, but GBP is clearly running into resistance at the 1.4300-1.4400 region after its short covering rally and may now drift lower towards 1.4000 support. We believe these forces will drive GBP/CAD lower

GBP/CAD to 1.95?

GBP/CAD to 1.95?

Chart Of The Day

GBP/CAD to 1.95?

Friday was all about the Japanese Yen but next week our focus turns to the British pound with PMIs and the Bank of England’s Quarterly Inflation Report scheduled for release. The Bank of England has every reason to lower their inflation forecasts and signal to the market that interest rates may not increase until the end of the year at the earliest. Given the sharp fall in retail sales and trade activity in the fourth quarter we are still surprised by the uptick in GDP. We prefer to put greater weight on Bank of England Governor Carney’s dovish comments and the likelihood of the BoE minutes and Quarterly Inflation report echoing that tone. GBP traded lower today and we are looking for further losses that should drive GBP/CAD below1.98 support and possibly even to 1.95. Oil prices are also in the process of forming a bottom and we expect USD/CAD to stage a more meaningful break below 1.40 this coming week.

Technically, GBP/CAD is in a downtrend. We fully expect the pair to test its 1.98 support level. If this is broken, the next stop should be 1.9550. If GBP/CAD rises back above 2.02 then the downtrend will be negated and further gains are likely.

GBP/CAD – Where’s Good Place to Sell?

GBP/CAD – Where’s Good Place to Sell?

Chart Of The Day

GBP/CAD – Where’s Good Place to Sell?

Fundamentally, we believe that the recent decline in GBP/CAD marks a top for the pair. Sterling faces a host of problems in the short and medium term while CAD, which has been hit hard by lower oil prices is nearing a bottom. This morning we learned from the Confederation of British Industry in the U.K. that manufacturing orders fell sharply in the month of January. While this is not a widely followed release, it shouldn’t be ignored as it has a strong correlation with the broader PMI manufacturing report. Export orders fell at a sharp pace in January, which does not bode well for U.K. growth. GDP is the only piece of market moving U.K. data on this week’s calendar and recent reports such as retail sales and trade point to a slowdown in growth. At the same time, last week’s Canadian economic reports were good with retail sales in Canada rising 1.7%. Oil is obviously a problem but $25 should mark a bottom for crude.

So that leaves the question of where is a good place to sell GBP/CAD and that’s where technicals come into play. The currency pair is attempting to break above the 100-day SMA and while that is important, the main resistance is level is 2.04. So the first opportunity to sell would be near 2.04 with a stop above 2.06. The more conservative option would be to sell closer to 2.06 with a stop above 2.08 for a move back to 2.000.

*This is NOT an official Big Trade recommendation but rather an interesting opportunity to watch.

GBP/CAD Big Trade 11.05.2015 -49

Swing

***Update 2 Close GBP/CAD at 2.1011 We were wrong on BoE they are very dovish. We are bailing out of this trade for -49. Sometimes the loss needs to be taken especially when their views on monetary policy is so misaligned with ours and the market that this should lead to continuation selling in GBP

11/5 Update Order to Buy 1 Lot GBP/CAD at 2.0160 TRIGGERED

GBP/CAD Big Trade Orders

Place Order to Buy 1 Lot GBP/CAD at 2.0160

Place Order to Buy 1 More at 1.9940

Stop for ALL at 1.9760