Robust USD on upper hand both on fundamental and technical grounds

The Federal Reserve chair person Janet Yellen reiterated that US rates are likely to increase sometime this year. The July Beige Book also kept sentiment toward USD strong. CAD and NZD were among the underperformers after BoC's rate cut and a further slump in dairy prices at Fonterra's auction. The dollar surged to its highest level in a week after Yellen sent strong indications that economic conditions are likely to justify an interest rate hike at some point this year.

The BoC's rate cut (by 25bps to 0.50%) has left a huge footprint on CAD. USD/CAD hovered just under the immediate high following the rate cut.

Technical Roundup: (USD/CAD)

USD/CAD curve is spiking off to Mars, Venus or some other planet despite leading oscillators reached overbought zone, the pair on EOD chart doesn't seem to bother these indications alerted by RSI and stochastic curves. RSI and stochastic are still showing positive convergence with every upswings in prices. On EOD charts, the daily close above 1.2835 opens up the 2009 high of 1.3063 as the next major level above.

We have been long USD/CAD in our fundamental portfolio tracker at an average entry of 1.2082. We raise the stop for now to 1.2710.