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  1. #1
    FX Consultant is offline Senior Member
    Join Date
    Jun 2004

    Default 15th June 2017 - Is the turn now on BOC to raise the interest rate?

    The market will be waiting today for BOE amid the current political tensions in UK which is watching rising of the inflationary pressure but with lower GDP growth rate.
    The MPC decision is expected to keep the interest rate and its APP unchanged, after The FOMC members could overcome yesterday their declared worries about the weak inflation forces in US and decided to raise the Fed fund rate by another 0.25% to be between 1% and 1.25% as widely expected.
    The decision came by majority as Minneapolis Fed President Neel Kashkari refused to raise the interest rate again.
    The committee members maintained their median expectation of having another 0.25% hiking by the end of this year, before raising it by 0.75% more next year lowering their median forecast of the interest rate to be at 2.9% by the end of 2019 from 3% they projected last march.
    The committee expected the inflation rate to continue to be in the short run below its 2% yearly inflation target, before stabilizing around this rate over the medium term as it targets.
    So, The committees expected the inflation rate to be at 1.6% this year down from 1.9% it's expected in March, but it kept its forecast for 2018 and 2018 at 2% yearly as the same as its median term inflation target expecting the GDP annualized growth rate to be by 2.2% this year from 2.1% it expected in March.
    Fed Chair Janet Yellen has said in her scheduled press conference following the meeting that the Fed is closely watching the inflation developments, while the risks facing the US economy are looking roughly balanced.
    Yellen indicated that if the economy is to continue to evolve in its expected course, The unwinding plan of its balances sheet will take effect relatively soon.
    After the committee mentioned in its statement that it is currently expecting to begin implementing a balance sheet normalization program this year, as the economy evolves broadly as anticipated.
    After preparing the market for this action in the previous meeting, The committee set this meeting its unwinding plan details for normalizing its balance sheet but without determining of the starting date of this action.
    The Fed announced that the initial cap will be set at $10 billion a month "$6 billion from Treasuries and $4 billion from mortgage-backed securities", before rising every three months by this same scale until the caps reach $30 billion of US treasuries and $20 billion of MBS.
    After this action, the turn is now looking at BOC to follow The Fed not at BOE as what has been expected previously before the Brexit.
    After BOC senior deputy governor Wilkins surprised the markets earlier this week by her comment that the economic growth continues to broaden by ideally and there will be assessing of all placed stimulus measurement to see, if they are still needed.
    Her comment could prop up the Lonnie across the broad, despite the oil prices easing down recently which usually weighs down on it.
    USDCAD stabilized to be traded close to 1.3250 in the recent hours following the Fed's decision, after its slide reaching of 1.3164 from 1.3539 whereas it had been before Wilkins's comments.

    After falling extension to 1.3164, USDCAD could find support to bounce up for trading now near 1.3150.
    But it's still well below its daily SMA50, its daily SMA100 and its daily SMA200, after this second impulsive wave to the downside which has been formed this week.
    USDCAD is now in its fifth day of being below its daily Parabolic SAR (step 0.02, maximum 0.2) which is reading 1.3491 today, after topping at 1.3539 below its previous peak which has been formed at 1.3547 on this Jun. 2.
    After bottoming out at 1.3164, USDCAD daily RSI-14 is still referring to existence inside its oversold territory below 30 reading 29.385.
    USDCAD daily Stochastic Oscillator (5, 3, 3) which is more sensitive to the volatility is still having also its main line inside its oversold region below 20 at 17.556 leading to the upside its signal line which is at 13.743

    Important levels: Daily SMA50 @ 1.2804, Daily SMA100 @ 1.2617 and Daily SMA200 @ 1.2522
    S1: 1.2636
    S2: 1.2364
    S3: 1.2108
    R1: 1.2976
    R2: 1.3047
    R3: 1.3118
    Have a good day
    Kind Regards
    Global Market Strategist
    Walid Salah El Din
    Mob: +20 12 2465 9143
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