GBPCAD,H1
Progress on the NAFTA front, with the U.S. last week dropping its contentious auto-content proposal, along with firmer oil prices, have given the Loonie a footing of late. The Canadian calendar livens up today after a quiet period. The January average weekly earnings expected to rise 0.2% (m/m, sa) which would match the print seen in the month prior. The BoC has been of the view that some slack remains in the labour market while the economy is operating at full capacity. Tomorrow brings January GDP, where a 0.1% rise is expected after the 0.1% gain in December. Real GDP is on track for a 2.0% pace in Q1, which would undershoot the BoC’s 2.5% estimate in the January MPR, which highlights the slowing growth outlook that underpins our base-case policy scenario for no change in rates until a 25 bp hike in July.
GBPCAD has settled today within the 50.0 and 61.8 Fibonacci retracement levels, near 1.8250 after Monday’s high at 1.8379. In general the pair is in a mix mode this week, with the pair drifting down 1.8133 yesterday morning, and rebounding on US open up to 1.8290, recovering more than 61.8% of the loss seen this week. The Daily technical indicators, though, continue to send bullish signals, suggesting the consolidation seen this week is just temporary. MACD is strongly positive while RSI has flattened below overbought area at 66, indicating that there is further space up to the overbought area.
However, the shorter timeframe picture presents weakness so far, with GBPCAD failing to break above the 61.8 Fibonacci level and with the latest hourly candle moving southwards and closing below the 50.0 Fibonacci level. The pair is currently traded at the confluence of 20-period SMA and the 50 period EMA. The break of the 50.0 Fibonacci level at 1.8255, triggered a short intra-day position , with targets at 200-period EMA at 1.8212, and 23.6 Fibo at 1.8190. Support comes at 1.8292.
In the hourly chart, the RSI is at neutral zone, has near oversold levels, Stochastic lines movign downwards below 50 and are negatively aligned, while the MACD is mixed since remains to the positive terittory, with positive momentum however to decreasing below its red-signal line.
Further more in the longterm, only a break below latest swing low at 1.8130 could suggest a reversal to the downside for the GBPCAD rally since January.
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Andria Pichidi
Market Analyst
HotForex
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