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market analysis
As the growth spread widens, can the US dollar/Canada dollar hit 1.3778 again?
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Hello everyone, today XM Foreign Exchange will bring you "[XM Foreign Exchange Market Review]: The growth spread expands, can the US dollar/Canada dollar hit 1.3778 again?" Hope it will be helpful to you! The original content is as follows:
On Friday (August 29), the US dollar/Canadian dollar (USD/CAD) www.xmniubi.competes on US PCE inflation in July and Canada's second quarter GDP. The annual PCE rate remained 2.6%, and the annual core PCE rate rebounded to 2.9%, with monthly rates of 0.2% and 0.3% respectively. Canada's real GDP fell by 0.4% month-on-month in the second quarter, exports plummeted 7.5%, and cumulative inventory increased by 30.01 billion CAD. Private sector capital expenditure weakened, with an annualized growth rate of -1.6%.
The growth difference between the United States and Canada has been further amplified: the United States' second-quarter annualized growth rate was estimated to be 3.3%. Against this background, the 30-minute chart of USD/CAD fluctuates around the 1.376 line, with short-term volatility rising from the low level. Traders focus on the pricing of interest rate paths before interest rate in September and the Bank of Canada's potential earlier/deeper easing risks.
Branditional
U.S.: The overall PCE inflation result in July is "in line with expectations". The core annual rate of 2.9% increased slightly from 2.8% in June, with a monthly rate of 0.3% continuing the moderate pace; the headline annual rate is stable at 2.6% and a monthly rate of 0.2%. www.xmniubi.combined with the more modest statements of the Federal Reserve Chairman at Jackson Hall - emphasizing the rising downward risks of the labor market and believing that the impact of tariff factors on inflation may be short-lived - the market continues to maintain the mainstream consensus of "25bp interest rate cuts in September", but there are still differences on the cumulative interest rate cuts throughout the year. PCE readings did not trigger directional fluctuations in the US dollar, which are more reflected in the re-evaluation of the final value and path of interest rates: on the one hand, the "stickiness" of core inflation has not yet www.xmniubi.completely subsided; on the other hand, the momentum of employment and demand has slowed down, limiting the sustainability of the rise in US Treasury yields.
Canada: GDP in the second quarter was significantly weaker than +0.5% in the first quarter, and the decline in exports and weak equipment investment jointly dragged down physical activities; corporate inventory destocking has a constraint on growth, while residents' consumption rebounded to 1.1% against the background of a 0.2% wage growth rate, which is more reflected in structural "squeezing" rather than total expansion. In contrast, the resilience of the US economy at an annualized 3.3% expansion of the growth spread between the two countries, and the market quickly raised the Bank of Canada's "advanced/larger rate cut" pricing relative to the Federal Reserve, suppressing the continuity of the Canadian dollar's rebound.
Overall, the US dollar did not suffer a significant setback after the PCE "boot landed", while Canada's unexpected weak growth has limited the retracement space above USD/CAD, and the exchange rate shows more of an event-driven range pull pattern.
Technical:
30-minute K-line shows that the Bollinger middle rail is at 1.3752, the Bollinger upper rail is 1.3766 and the lower rail is 1.3739; the latest price fluctuates around 1.3760. During the session, it rushed up to 1.3778 and then fell back quickly, confirming the first resistance near the upper track; it formed a double low resonance support at 1.3736 and 1.3740 below. In terms of MACD, DIFF=0.0002, DEA=0.0000, the bar chart turns positive to 0.0004, showing that the kinetic energy turns positive from negative but the intensity is limited; RSI(14) is about 53.7, slightly more but has not entered the overbought area.
In terms of form, the Bollinger band has previously experienced "squeezing" and the rhythm of "upward rushing is blocked + retracement to the middle track", which is more like a technical rebound starting from the low (1.3736-1.3740 zones), which has not yet evolved into a clear trend reversal.
Price level: 1.3752 is the current pivot position (Bolling middle rail); the upper resistance is 1.3766 (dynamic resistance of the upper rail) and 1.3778 (high point of the day); if the volume breaks through, further focus on the historical resistance magnetism of the left high point 1.3857. The lower support focuses on the "double bottom neck" of 1.3740 and 1.3736. Once it is lost, the Bollinger lower rail 1.3739 and medium- and short-term lows will constitute a pressure reversal, and the risk of technical drawdown will increase. The overall volume, price and indicator structure point together: the "narrow upward range" under the long and short tug-of-war, requires fundamental catalysis or volume energy breakthrough to confirm the direction.
Future Outlook
Bolster Outlook: If the subsequent US data maintains resilience in employment and service prices, while the Federal Reserve has launched a rate cut but emphasizes "step by step and data dependence", the US dollar interest rate spread and real yield will still be resilient; coupled with Canadian data continuing to confirm weak foreign demand and pressure on corporate investment, USD/CAD is expected to continue to "step-by-step rise." Technically, once the price is effectively on the 1.3778 and stabilizes on the Bollinger upper track, the price will enter the "upper track walking" state, and the next focus will move up to the historical resistance of 1.3857; if the MACD synchronously amplifies the positive column and the "secondary golden cross" of DIFF for DEA appears, moreHead momentum will be quantitatively verified. However, it should be emphasized that the continuation of the short-term trend still depends on the breakthrough of quantity energy. If the quantity energy is insufficient, the breakthrough will easily evolve into an extended oscillation of "false breakthrough + back-testing the middle track".
Bell prospects: If the subsequent US data points to a faster cooling of demand, or the Fed's forward guidance releases a stronger "loose tendency", the US dollar's decline and risk preference repair will suppress USD/CAD; at the same time, if the high-frequency data released by Canada shows a "marginal improvement", it is more likely to trigger short-term kill and long pullbacks. Technically, if the middle rail of 1.3752 is broken down by large volume and the resonance support of 1.3740/1.3736 is lost, the Bollinger lower rail of 1.3739 will transform from "dynamic support" to "upper resistance", and the structural retracement will point to the demand for www.xmniubi.compensation in the previous intensive trading area. On the indicator side, once the RSI falls below 50 and the MACD bar chart turns negative and expands, the bears will gain momentum resonance. However, considering the fundamental constraints of Canadian growth, if the bears want to interpret it as a "unilateral downward trend", they still need to significantly benefit the catalysis of the Canadian dollar.
The above content is all about "[XM Foreign Exchange Market Review]: The growth spread expands, can the US dollar/Canada dollar hit 1.3778 again?". It was carefully www.xmniubi.compiled and edited by the editor of XM Foreign Exchange. I hope it will be helpful to your trading! Thanks for the support!
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