USD/CAD Exchange Rates Outlook – US GDP Report


The USD/CAD tags the new monthly low at 1.3330 before the release of the US GDP report. Also, the current conditions in the stock market might keep the pair’s exchange rate under lots of pressure with the RSI establishing the downside trend by the end of July.


The USD/CAD is still on the tip to test the June low at 1.3315 after the central bank interest rate decision as the federal reserve sticks to a similar script and retain the dovish guidance for the fiscal policy.
It is highly likely that the Federal Open Market Committee (FOMC) will continue using the lending program alongside the asset purchases to halt the economic shock from the coronavirus pandemic crisis as Jerome Powell vow to “boost our Treasury holdings and the agency MBS (Mortgage Backed Securities) within the current pace.
A closer look ahead, the updates to the United States Gross Domestic Product report might leave the FOMC without any other option, but to hold onto the current policy during the remainder of 2020 as the economy faces the greatest contraction from the time the data series started back in 1947. Also, the growth rate is projected to make a fresh 34.1 percent in the 2nd quarter after the 5% plunge in early 2020.

USD/CAD Rate Chart

On the other hand, the federal reserve balance sheets seem likely to rise back over $7 trillion with the FOMC remaining dedicated to using their wide range of resources to fully support the economy of the united states during these challenging times. Also, the current market conditions might continue into august with the US Dollar crowding trend persisting.
In essence, the IG Client Sentiment continues reflecting the net-long USD bias as the retail investors’ net long US Dollar vs. CAD from may although the rate closed the price gap in march.
The most recent update indicates that 64.47% of investors are net-long the USD/CAD. Essentially, the ratio of investors short to long at 1:1.81. On the other hand, the investor’s net-long is 4.90 percent higher than Wednesdays and 22.74 percent higher from week 30.
The incline in the net long points shows that the retail investors are assessing the possible reactions to the march low trading at 1.3315 amidst the trends seen back in June whereas the decrease in the net short interest can be large because of the profit-taking trends as the rate tags a new monthly low trading at 1.3330 as we head into late July.
Having said that, last month’s low (1.3315) is still on the radar for the USD/CAD with the rate further extending the plunge from early July and the RSI might show a bearish momentum gaining pace incase the indicator presents an extreme reading such as the trend seen in June.
However, it’s important that we keep a watchful eye on the relative strength index as it creates a downtrend in late July, and
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