Canada’s election could shake the Loonie

The Canadian Federal elections are to be held today and there seems to be a wide interest in the elections in contrast to the past, which tends to increase the uncertainty of the outcome, while the “Trump” factor tends to favour the Liberals. For the time being, expectations are for the Liberals to win an absolute majority, which could have a short-term impact on the CAD, while a surprise win of the Conservatives may cause the CAD to rally. Over in China, the Chinese Government has implied that there have not been calls with the US recently in regards to trade negotiations.

EUR/USD appears to be moving in a predominantly upwards trajectory, however we would not be surprised to see the pair possibly aiming for lower ground in the short term. Nonetheless, we opt for a predominantly bullish outlook and supporting our case is the RSI indicator below our chart which currently registers a figure close to 60 implying a bullish market sentiment. Yet the retreat of the indicator from 70 to 60, may imply that the bullish momentum could be fading. Nonetheless, for our bullish outlook to continue, we would require a clear break above our 1.1470 (R1) resistance line with the next possible target for the bulls being the 1.1685 (R2) resistance level. On the other hand, for a sideways bias we would require the pair to remain confined between the 1.1185 (S1) support level and the 1.1470 (R1) resistance line. Lastly, for a bearish outlook we would require a clear break below the 1.1185 (S1) support level, with the next possible target for the bears being the 1.0950 (S2) support line.

USD/CAD appears to be moving in a predominantly downwards direction. We opt for a bearish outlook for the pair and supporting our case is the RSI indicator below our chart which currently registers a figure close to 40 implying a bearish market sentiment. For our bearish outlook to continue we would require a clear break below the 1.3830 (S1) support level with the next possible target for the bears being the 1.3618 (S2) support line. On the other hand, for a sideways bias we would require the pair to remain confined between the 1.3830 (S1) support level and the 1.4025 (R1) resistance level. Lastly, for a bullish outlook we would require a clear break above the 1.4025 (R1) resistance line, with the next possible target for the bulls being the 1.4235 (R2) resistance level.

Other highlights for the day:

Today we get UK’s CBI distributive trades indicator for April and the US Dallas Fed manufacturing business index for the same month while ECB Policymaker Rehn and in tomorrow’s Asian session RBA Ass. Gov. Kent speak.

As for the rest of the week:

On Tuesday we get Germany’s forward looking GfK consumer sentiment for May, Sweden’s preliminary GDP rate for Q1, Euro Zone’s business climate for April, the US consumer confidence indicator also for April and the US March JOLTS job openings figure. On Wednesday we get Japan’s preliminary industrial output growth rate for March, China’s Caixin and NBS manufacturing PMI figures, Australia’s CPI rates for Q1, the Czech Republic’s, France’s, Germany’s and the Euro Zone’s preliminary GDP rates for Q1, the preliminary HICP rates for April of France and Germany, Switzerland’s KOF indicator for April, the US ADP national employment figure for April, Canada’s GDP rate for February, the US Core PCE Price index for March and we highlight the release of the US GDP advance rate for Q1 and on a monetary level, we note from Canada that BoC is to release the Summary of monetary policy deliberations of the April meeting. On Thursday, we highlight the release of Japan’s BoJ interest rate decision while from the US we get the weekly initial jobless claims figure and the ISM manufacturing PMI figure for April and from Canada the S&P manufacturing PMI figure also for April. On Friday we get Australia’s PPI rates for Q1 and retail sales for March, Euro Zone’s preliminary HICP rate for April, the US factory orders for March and we highlight the release of the US employment report for April.

EUR/USD  Daily Chart

• Support: 1.1185 (S1), 1.0950 (S2), 1.0740 (S3)
• Resistance: 1.1470  (R1), 1.1685 (R2), 1.1890 (R3)

USD/CAD Daily Chart

• Support: 1.3830 (S1), 1.3618 (S2), 1.3430 (S3)
• Resistance: 1.4025 (R1), 1.4235 (R2), 1.4440 (R3)

If you have any general queries or comments relating to this article please send an email directly to our Research team at research_team@ironfx.com

Disclaimer:
This information is not considered as investment advice or an investment recommendation, but instead a marketing communication. IronFX is not responsible for any data or information provided by third parties referenced, or hyperlinked, in this communication.

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