The downward trend continues. Last week, the rates reached the level of January 2020. The strengthening of the Canadian dollar was possible due to the weakening of the USD against all currencies as a result from a deterioration of the economic situation in the USA, the coronavirus and falling government bond yields. This motivated investors to look for other assets to invest in. In addition, the rally in the oil market encouraged the CAD to grow, although according to analysts, this affected the value of the Canadian currency less than usual.
This month the situation began to change in favor of the USD. The dollar is recovering against gold, the euro, and the pound. As for the Canadian dollar, we observe a consolidation of the rates during the week. Many investors have taken a wait-and-see attitude in the run-up to the Jackson Hole Symposium, with volatility declining. The possibility of a long consolidation is not impossible as we get closer to the elections in the United States.
We believe that in the near future, there is a high probability of aprice correction or even a trend reversal. In fact, we already observe a steady upward movement of the rates on the chart, which started this week. Perhaps, if oil prices continue rising, the Canadian dollar will be strong enough to successfully counter the increasingly strong US currency. However, despite the fact that most technical analysis tools tend to the deals to Sell, our choice are the deals against the trend in the short term.
