EURCAD and the BoC interest rate decision

Prices as of previous day instrument closing.

• Negative session for US indices as the DJIA slid 109.41 points or 0.45% to 24,180.64 while Nasdaq Composite dropped 13.15 points or 0.19% to 6,762.21. S&P500 lost 9.87 points or 0.37% to 2,629.57. Yesterday  3,745 (53%) stocks traded on AMEX, Nasdaq and NYSE closed above their 50 day MA while 3,222 issues (47%) closed below their 50 MA.  64% of shares traded declined and the CBOE VIX closed the session at 11.3 , down 2.19%.
• In the FX market  EURUSD slid 0.34% to 1.1826, down for the third consecutive session and USDJPY rose 0.16% to 112.60. GBPUSD dropped 0.27% and closed at 1.3443.  The US Dollar Index DXY closed at 93.37, up 0.20% while 10 year T-Note yield slid 0.90% to 235 bp.
• Gold slid 0.81% to 1,265.77 $/oz while Silver continued its downtrend as the commodity lost 1.32% to 16.10 $/oz, down 8 session out of 9. Platinum slid as well as the precious metal closed at 916 $/oz, down 1.08% while Palladium lost 0.86% to 986.34 $/oz.

Chart of the day

EURCAD (daily timeframe)

Today the Bank of Canada will decide the benchmark rate level,  and is expected that Board chaired by Governor Poloz will keep rates unchanged. The BoC made a 50 basis point rate hike this year in 2 occasions and the September 25bp rate hike was quite unexpected. EURCAD  made a fake breakout of its resistance 1.5262 and reached 1.5372. Today volatility should be higher than usual and in case the pair will drop it may reach the medium term demand line in area 1.4880.  EURCAD it may continue to stay in a trading range environment if it will manage to trade in the band 1.562-1.4466.

Economic Calendar

Constitution Day is celebrated in Spain today, but it might not feel the same as other years in the aftermath of the issues surrounding Catalonian independence. In the morning at 9:00 CET, ECB members meet for the monthly non-monetary policy discussion. Mersch, a member of the ECB’s executive board, will speak two and a half hours later on “Challenges for Monetary Policy in 2018”.
In the afternoon, Canada decides on interest rates at 16:00 CET. The BoC communicated last week that they are optimistic higher interest rates would make the financial system stronger, while also saying this would take time and has an uncertain outcome as they face a troubled housing market.  The interest is rate is expected to remain unchanged at 1%. Weekly US mortgage applications and crude oil stocks change are released at 13:00 and 16:30 CET respectively. The latter is forecasted to drop by 2.5million barrels. 190,000 jobs are expected to have been created from 235,000 a month earlier as ADP released the US employment change for November at 14:15 CET.

Technical Analysis

EURUSD (Daily timeframe)

EURUSD broke the short term bullish channel and it may test the 21 and 55 MA. A pullback is also possible. Static support at 1.1666 and 1.1590. In case of a fake breakout followed by a rally EURUSD could test 1.20 and then make a breakout of the higher side of the channel. The channel width makes price projections above the 1.2092 2017 high.  

GBPJPY (Daily timeframe)

GBPJPY made a double top in area 152.86 on Monday and then started a retracement that could find support in area 149.66 and then on the bullish trendline. Beneath 147 selling pressure could increase.  Above yesterday high GBPJPY it may test again 152.86, its 2017 top

USDZAR  (Daily timeframe)

USDZAR is could test soon its 200 MA as the Rand rallied after USDZAR reached a 2017 top near 14.57. In case USDZAR weakness will continue the pair it may test the lower side of the channel.  If the pair will rebound from its current level, as now it is testing its 61.8% Fibonacci retracement, it should find resistance against the 55MA and then area 14.

NZDUSD (daily timeframe)

NZDUSD is making lower highs and lower lows. A breakout of the short term supply line should lift the Kiwi dollar near 0.70 and then make a pullback on the lower side of the channel. Beneath 0.6825 NZDUSD could test 0.68 and then 0.67.

EURGBP (daily timeframe)

The rate found support near 0.8745 and below this area it may test the 61.8% Fibonacci retracement near 0.87. Beneath this static level EURGBP could make a 100% retracement to 0.8315. A breakout above the short term dynamic resistance could lift EURGBP to 0.90 and then to 0.93.