USD/CAD Exchange Rate Forecast – The Dollar Edges Higher Following Weak Canadian Housing Starts
The USD/CAD found a footing after declining sharply last week. U.S. Treasury yields rallied following despite weaker than expected U.S. Industrial production. The focus remains on the Fed who are expected to reduce their bond purchase program. Canadian housing starts declined more than expected which helped The Greenback gain traction.
Technical Analysis
The dollar gained against the Loonie, but remains in a downtrend. Resistance is seen near the 10-day moving average at 1.2466. Support is seen near the July lows at 1.2308 The 10-day moving average has crossed below the 50-day moving average which means that a short-term downtrend is in place. Short-term momentum has turned positive as the fast stochastic generated a crossover buy signal. Prices are oversold as the fast stochastic is printing a reading of 9 below the oversold trigger level of 20 which could foreshadow a correction, Medium-term momentum has turned negative the MACD (moving average convergence divergence) index generated a crossover sell signal. The MACD histogram is printing in negative territory with a lower trajectory which points to a lower exchange rate.
Canadian housing starts for September came in at a rate of 251,151 units, a 4.4% decrease from 270,744 units in August, Canada Mortgage and Housing Corp. reported on Monday. Market expectations were for starts to come in at 256,500 in September. The trend measure for September, or a six-month moving average of the monthly seasonally adjusted annual rate of housing starts, declined to 271,068 units, from roughly 284,757 units in the previous month.
This article was originally posted on FX Empire
