USD/CAD: BoC decision on interest rates

USD/CAD: BoC decision on interest rates

19 October 2016, 12:13
Yuri Papshev
0
30

Trading recommendations

Buy Stop 1.3130. Stop-Loss 1.3080. Take-Profit 1.3250, 1.3300

Sell ​​Stop 1.3050. Stop-Loss 1.3110. Take-Profit 1.3000, 1.2840, 1.2760

 Technical analysis

The fifth session USD/CAD pair is reduced, which reflects the general trend of the US dollar in relation to commodity prices and commodity currencies, respectively.

Pair USD / CAD is back to key support levels 1.3100 (38.2% Fibonacci level of the correction to the growth of the pair to the beginning of July 2014 and the level of 1.0650), 1.3085 (EMA200, EMA144 on the daily chart). On the daily and weekly charts the pair USD / CAD remains in the uplink. OsMA and Stochastic indicators, thus, indicate short positions. Thus, there is a very interesting situation. The level of 1.3085 in this case is a line of the balance to which the price returns periodically with fluctuations within a range between the levels of 1.3300, 1.2840 since early July.

Earlier this month, the pair USD / CAD rebounded from the strong support levels 1.3100, 1.3085, however, rising above the level of 1.3300 the pair could not develop. As long as the pair remains above these levels,

Positive dynamics is preserved.

Further dynamics of the pair USD / CAD will be fully depend on the position of central banks in the US and Canada with respect to monetary policy and oil prices.

The upper boundary of the rising channel on the daily and weekly charts passes near the level of 1.3300. In case of breaking this level and the continuation of growth of pair level 1.3680 (23.6% Fibonacci level) is a guide and a medium-term objective.

Reverse the scenario associated with the breakdown of the support level 1.3085. In the case of the downward trend of decline in the pair may continue to support levels 1.2840, 1.2760 (August lows). Near these levels also passes the lower limit of the channel on the daily chart.

Break of 1.2760 support level could signal a resumption of the downtrend for the pair USD / CAD 1.2635 with the immediate objectives (50.0% Fibonacci level), 1.2525 (at least one year).

Our opinion - USD / CAD pair will remain in the range of 1.3300 - 1.2840 before the end of the year, when the Federal Reserve decides on interest rates. The median line - the levels of 1.3085, 1.3100.

Support levels: 1.3100, 1.3085, 1.2840, 1.2760, 1.2635, 1.2525

Resistance levels: 1.3250, 1.3300, 1.3400, 1.3680

 

At today's oil minister of Saudi Arabia, the recent meeting in Istanbul brings closer the positions of the OPEC countries and countries outside the cartel. According to the Minister, the conditions in the oil market will continue to improve, and the decline in oil prices is coming to an end. In response to these statements, the spot price of oil has jumped in the moment almost $ 0.5 per barrel. Following the oil quotes grew quotes commodity currencies - the Australian and Canadian dollars. The oil and gas sector is the main place in these economies. Canada is a net exporter of oil. Oil is an important source of export revenue in Canada, and oil prices have a strong correlation with the Canadian dollar quotations. The Canadian dollar is very sensitive to the dynamics of the oil market.

Yesterday, the American Petroleum Institute (API) published its weekly report on changes in US oil inventories, which pointed to the decline in stocks in the storage tanks of 3.8 million barrels. Today the price of oil and the Canadian dollar continues to fulfill this information, growing up in price, and on the eve of today's publication (at 17:30 GMT + 3) The official report from the US Department of Energy on oil and petroleum products storage facilities in the country.

Also at 17:00 it will be published on the Bank of Canada interest rate decision and the accompanying statement of the Bank of Canada. Current level of the rate is 0.5%. Despite the fact that in Canada there is a decrease in inflation, the Bank of Canada believes that core inflation will approach the central bank set the level of 2% in 2017 to the extent that, as will diminish the negative effect of the fall in energy prices. Last month, the Bank of Canada did not change the interest rate in the country, keeping it at the level of 0.5%. However, the propensity of the Bank of Canada to further easing its monetary policy is also maintained.

At the time of the publication of today is expected to surge in volatility that will create a lot of trading conditions in trading the Canadian dollar.

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*)presented material expresses the personal views of the author and is not a direct guide to conduct trading operations.

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