Canadian Dollar displays broad based strength today, as the post job data rally extends. Recent economic data from Canada suggesting that underlying backdrop is improving. GDP growth will likely regain momentum ahead to make up the short falls in the Q1. For now, BoC looks the least likely among global central banks to ease monetary policy. Indeed, should global trade tensions improve, BoC could be ready for policy normalization again.
Technically, GBP/CAD’s break of 1.6093 support and today’s steep decline suggests resumption of fall from 1.7794. More importantly, the structure of the decline from 1.7794 affirms that it’s resuming that one from 1.8415 high too. A retest of 1.6594 low should be seen pretty soon. Break will target 100% projection of 1.8415 to 1.6594 from 1.7794 at 1.5973 in medium term. This will remain the favored case as long as 1.7135 near term resistance holds.
AUD/CAD’s steep decline last week also suggests rejection by falling 55 day EMA, which is a bearish signal for near term. Further fall should be seen to 0.9201 support next and break will target 0.9105 low.
Prior rejection by 55 week EMA also suggests medium term bearishness. However, over price actions don’t display clear downside impulsiveness. And AUD/CAD is relatively closely long term fibonacci level of 50% retracement from 0.7149 to 1.0784 at 0.8967. Hence, while a break of 0.9105 might be seen in medium term, 0.9 handle could contain downside.