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U.S. Dollar To Rise Against The Canadian Dollar

Aug. 06, 2018 3:39 PM ETCADS, FXC, UDN, UUP


  • The US dollar tumbled to the projected level of 1.3016.
  • Canada managed to narrow its deficit shortfall from a whopping C$ 2.7 billion to C$ 600 million.
  • The United States has threatened to raise tariffs from 10% to 25% on $200 billion worth of Chinese goods.
  • The technical picture of the US dollar looks positive all thanks to the formation of a Doji candle signal.

In my last article, I was bearish on the US dollar as I expected it to fall to the 1.3016 mark. This came true as the greenback tumbled against the Canadian dollar, which resulted in it closing last week at 1.2990. Thus, in this article, I shall ascertain the likelihood of the US dollar rising against the Canadian dollar, as I expect the USD to rise till the 1.3156 mark. Hence, to establish the likelihood of this occurring, I shall look at the fundamental news affecting the pair whilst also analysing the charts using technical analysis tools.

Fundamental news for the pair:

  • Canadian Trade Deficit:
    • Canada has managed to reduce its trade deficit shortfall from C$2.73 billion in May to C$630 million in June. This level of reduction was not anticipated as analysts had it pegged at C$2.3 billion. Moreover, this is smallest shortfall since January 2017 when it stood at C$500 million.
    • Canadian exports rose to 4.1% in June amid broad-based gains. The rise in exports was primarily due to a 18.9% gain witnessed in aircraft equipment exports and a 7.1% gain seen in energy products exports. On the other hand, the value of imports fell by 0.2%. The drop-in import levels largely occurred due to a 24.7% fall in the importation of refined petroleum energy products.
  • Trade War issues:
    • On the trade frontier, the sense of truce between China and United States has fizzled out. This is due to the US threatening to raise tariff rates from 10% to 25% on Chinese goods worth $200 billion. The imposition of these tariffs is due at the end of this month.
    • Moreover, China has allowed the Yuan to devalue which seems to be a retaliatory move against the United States.
  • US Non-farm payrolls report:
    • The US wages in June came

This article was written by

I am a finance and investment professional whose prime focus is on the British, Indian and American financial markets. I specialise in technical analysis with my key area being Candlestick pattern analysis and Fibonacci analysis.  Academically, I posses two masters degrees one is a Masters of Science in Finance degree from the University of Portsmouth, United Kingdom and the other is a Masters of Commerce degree specialising in Accounting. My Bachelors degree is in Economics, Finance and Banking from the University of Portsmouth, United Kingdom.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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