The rates continue as part of a weak downtrend in favor of the Canadian dollar. Last month, this currency gained momentum thanks to rising oil prices and record demand for black gold. Things got tougher in August as oil came under pressure due to problems in China's economy, which is a major oil consumer. The US dollar received support given the speculation on the topic of the growth rate, however, macroeconomic reports in the US were also supportive.
This week, oil remained under pressure, and the Canadian dollar was left without support, not to mention the unfavorable news background for commodity currencies in general. In fact, this month we have not seen a single trading day when the Canadian dollar gained an advantage over the USD.
The higher-than-expected inflation report in Canada went unnoticed as it turned out to be a drop in the ocean of negatives for the CAD. The American economy, in turn, reported on the growth of the construction sector and real estate, as well as on the growth of retail sales in July. Published this week, the FED minutes showed the positive attitude of officials regarding the growth of interest rate, so that another increase will definitely take place this year.
Most technical analysis tools indicate the effectiveness of buying in the long run. We will not argue, but note that the 10+ day rally of the US dollar against the CAD may take a pause, that is, the price correction may end at any time. Next week will pass with low volatility, as no significant events or reports are expected. Many indicators show overbought at the moment, so in the short term we expect a resumption of downward movement, which means that today our choice are the deals to SELL.
