Thread: USD/CAD focus: Bank of Canada rate decision and Canadian CPI

Market Focus 19/20 JAN 2010: Bank of Canada rate decision & Canadian CPI

Bank of Canada expected to keep rates steady at 0.25%
Year-on-year CPI to increase to 1.6% from 1.0%
Strength of Canadian dollar may pose risk to economic recovery


The Bank of Canada will announce its decision on interest rates at 14:00GMT on Tuesday 19th January and CPI data for December will be released at 12:00GMT on Wednesday, followed by the Monetary Policy Report on Thursday at 15:30GMT.

Analysts polled by Reuters expect the central bank to hold rates at a record low of 0.25% (where they have been since April 2009) and repeat their intention to keep the benchmark rate at that level until the end of the second quarter of 2010, as outlined in the April 2009 Monetary Policy Report (MPR). The latest MPR will be released on Thursday and will contain the central bank’s views on the Canadian economy.

Data that traders will also focus on are the December CPI figures, with markets expecting –0.1% and –0.2% for the month-on-month headline and core numbers respectively. The year-on-year CPI is forecast to increase to around 1.6% from 1.0%, reflecting the rise in gasoline prices and pushing the CPI close to the 2.0% target set by the central bank. The Bank of Canada revised its prediction for a return to the inflation target in the October 2009 MPR by saying that it would be the third quarter of 2011 before the objective is reached. Although the new MPR due on Thursday will give a clearer view of the central bank’s projections, the market may act if the CPI data shows that inflation is rising faster than expected (a year-on-year core CPI of 1.9% would be sufficient enough to achieve that result).

The strength of the Canadian dollar has also been an issue for the central bank, with the surge in commodity prices being a factor behind the loonie’s rise to a three-month high versus the greenback. If the Canadian dollar is able to reach the parity level versus the U.S. currency, this may increase the downside risk to the economic recovery (especially in terms of exports) and dampen growth expectations in 2010. As such, the central bank will not want to sound too hawkish and make comments on withdrawing its easy monetary policy anytime soon.

The Canadian dollar will stand to benefit from a hawkish tone from the central bank and its MPR, as well as upbeat CPI data; however, traders will also be looking to take profits following the loonie’s recent rally. Any comments that are skewed to the dovish side may result in a rebound in the usd/cad rate as short positions are unwound.


Imperialfxonline


For comments and feedback, please email research@imperialfxonline.com

Daily: The USD/CAD continues to climb in this recent environment of risk aversion and news of China's tightening of regulations which subdued any strength in commodities and thus commodity currencies such as the CAD, AUD, and NZD.

The daily time-frame shows the market struggling to reach the previous top at 1.075. The 1.07 is holding as resistance so far in three attemps this week.

The market may be starting a bullish run in the USD/CAD, but a significant correction would help with timing and could further confirm the bullish mode.

Weekly: The weekly time-frame shows that the 1.10-1.11 area is an important resistance. So if the markey breaks the 1.075 area, this may be the next resistance.

This is also an important area as it may coincide with the 200 and 50 MAs in the Weekly time-frame. We will see then if the current rally is a major correction, or whether a long-term rally is starting to take off.[Written by CMS Forex]

"P&F USDCAD1440 Box Size 225X3 or(5.37%) CLOSE
Data 1.5972 - 0.9161 ~ 92 Month ~ 2810 Day
Database 2000 records 1.0703 (Last Close)
2002-05-21 00~00
2010-01-29 00~00 (GMT+01:00) Paris
BJF Trading Group chart"

1.5975|~225||_____________________________________ ___________|-0.02%|74.38%
1.5750|~45O||x____________________________________ ___________|1.39%|71.92%
1.5525|~675||x_o__________________________________ ___________|2.8%|69.47%
1.5300|~9OO||x_o__________________________________ ___________|4.21%|67.01%
1.5075|~1125|__o__________________________________ ___________|5.62%|64.56%
1.4850|~135O|__o__________________________________ ___________|7.02%|62.1%
1.4625|~1575|__o__________________________________ ___________|8.43%|59.64%
1.4400|~18OO|__o__________________________________ ___________|9.84%|57.19%
1.4175|~2O25|__o__________________________________ ___________|11.25%|54.73%
1.3950|~225O|__o_x___x____________________________ ___________|12.66%|52.28%
1.3725|~2475|__o_x_o_x_o__________________________ ___________|14.07%|49.82%
1.3500|~27OO|__o_x_o_x_o__________________________ ___________|15.48%|47.36%
1.3275|~2925|__o___o_x_o__________________________ ___________|16.89%|44.91%
1.3050|~315O|______o_x_o__________________________ ___________|18.29%|42.45%
1.2825|~3375|______o_x_o_____________x___x_______x ___________|19.7%|40%
1.2600|~36OO|______o___o_x___________x_o_x_o_x___x _o_________|21.11%|37.54%
1.2375|~3825|__________o_x_o_________x_o_x_o_x_o_x _o_________|22.52%|35.08%
1.2150|~4O5O|__________o_x_o_________x_o_x_o_x_o_x _o_________|23.93%|32.63%
1.1925|~4275|__________o_x_o_________x_o_x_o_x_o__ _o_________|25.34%|30.17%
1.1700|~45OO|__________o___o_x_______x_o_x_o______ _o_________|26.75%|27.72%
1.1475|~4725|______________o_x_o_____x_o__________ _o_x_______|28.16%|25.26%
1.1250|~495O|______________o_x_o_____x____________ _o_x_o_____|29.56%|22.8%
1.1025|~5175|______________o_x_o_____x____________ _o_x_o_____|30.97%|20.35%
1.0800|~54OO|==============o===o=====x============ =o===o=x===|32.38%|17.89%
1.0575|~5625|__________________o_____x____________ _____o_x_o_|33.79%|15.43%
1.0350|~585O|__________________o_x___x____________ _____o_x_o_|35.2%|12.98%
1.0125|~6O75|==================o=x=o=x============ =====o===o=|36.61%|10.52%
0.9900|~63OO|__________________o_x_o_x____________ ___________|38.02%|8.07%
0.9675|~6525|__________________o_x_o______________ ___________|39.43%|5.61%
0.9450|~675O|__________________o_x________________ ___________|40.83%|3.15%
0.9225|~6975|__________________o_x________________ ___________|42.24%|0.7%
0.9000|~72OO|__________________o__________________ ___________|43.65%|-1.76%
Column|||||||3_113_6_6_104_8_4_126_3_146_6_5_4_3_4 _9_3_6_3_3_|
Count



BJF-Trading-Group_Excel_Chart

It's a great analysis. Thank you very much and I will try to read your article next.

The main support 1.0410 stood strong against continuous attempts from the pair to bearishly reverse, where it rebounded and completed forming the bullish technical pattern that comes inline with the bullish pattern, shown yesterday, where the pair achieved more bullish movement. We expect an overall bullish direction over an intraday direction, which will start with the breach of the mentioned neckline to head towards main targets that start 1.0565 then 1.0650. It is vital that 1.0410 areas remain intact, which are vital factors in achieving the awaited bullish direction.
The trading range for today is among the key support at 1.0350 and the key resistance at 1.0650.
The general trend is to the downside as far as 1.1870 remains intact with targets at 1.0000.
[Written by ecPulse.com]

"P&F USDCAD1440 Box Size 225X3 or(5.38%) HI/LO
Data 1.6054 - 0.9058 ~ 94 Month ~ 2856 Day
Database 2038 records 1.0391 (Last Close)
2002-04-26 00~00
2010-02-19 00~00 (GMT+01:00) Paris
BJF Trading Group chart"

1.6200|~225||_____________________________________ ___|-0.91%|78.85%
1.5975|~45O||x____________________________________ ___|0.49%|76.36%
1.5750|~675||x_o__________________________________ ___|1.89%|73.88%
1.5525|~9OO||x_o__________________________________ ___|3.3%|71.4%
1.5300|~1125|x_o__________________________________ ___|4.7%|68.91%
1.5075|~135O|__o__________________________________ ___|6.1%|66.43%
1.4850|~1575|__o__________________________________ ___|7.5%|63.94%
1.4625|~18OO|__o__________________________________ ___|8.9%|61.46%
1.4400|~2O25|__o__________________________________ ___|10.3%|58.98%
1.4175|~225O|__o_x________________________________ ___|11.7%|56.49%
1.3950|~2475|__o_x_o_x____________________________ ___|13.11%|54.01%
1.3725|~27OO|__o_x_o_x_o__________________________ ___|14.51%|51.52%
1.3500|~2925|__o___o_x_o__________________________ ___|15.91%|49.04%
1.3275|~315O|______o_x_o__________________________ ___|17.31%|46.56%
1.3050|~3375|______o_x_o_____________________x____ ___|18.71%|44.07%
1.2825|~36OO|______o___o_________x___x___x___x_o__ ___|20.11%|41.59%
1.2600|~3825|__________o_x_______x_o_x_o_x_o_x_o__ ___|21.51%|39.1%
1.2375|~4O5O|__________o_x_o_____x_o_x_o_x_o_x_o__ ___|22.92%|36.62%
1.2150|~4275|__________o_x_o_____x_o_x_o___o_x_o__ ___|24.32%|34.14%
1.1925|~45OO|__________o___o_____x_o_x_____o___o__ ___|25.72%|31.65%
1.1700|~4725|______________o_x___x_o_x_________o_x ___|27.12%|29.17%
1.1475|~495O|______________o_x_o_x_o___________o_x _o_|28.52%|26.68%
1.1250|~5175|______________o_x_o_x_____________o_x _o_|29.92%|24.2%
1.1025|~54OO|______________o___o_x_____________o_x _o_|31.33%|21.72%
1.0800|~5625|__________________o_x_____________o__ _o_|32.73%|19.23%
1.0575|~585O|__________________o_x________________ _o_|34.13%|16.75%
1.0350|~6O75|__________________o_x________________ _o_|35.53%|14.26%
1.0125|~63OO|__________________o_x________________ ___|36.93%|11.78%
0.9900|~6525|__________________o_x________________ ___|38.33%|9.3%
0.9675|~675O|__________________o_x________________ ___|39.73%|6.81%
0.9450|~6975|__________________o_x________________ ___|41.14%|4.33%
0.9225|~72OO|__________________o__________________ ___|42.54%|1.84%
0.9000|~7425|_____________________________________ ___|43.94%|-0.64%
Column|~765O|4_1136_5_9_3_7_3_1116_6_6_3_3_4_5_104 _6_|
Count



BJF-Trading-Group_Excel_Chart

Trade Idea: USD/CAD - Buy Limit at 1.044; Target: 1.084 ; Stop: 1.028.
=================================================

Since the middle of May, the USD/CAD has been trading in a bullish trend. Recently, the prices rebounded at its upper Fibonacci Fan and could recover at its Fan around 1.0645 (50.0). Now it seems that the USD could start a pull back. Important is a breakthrough of the 61.8 Fan. Also the crossing Stoch indicator through the signal line from below may indicate a further bullish trend.

"P&F USDCAD1440 Box Size 200X3 or(4.79%) HI/LO
Data 1.5995 - 0.9056 ~ 92 Month ~ 2812 Day
Database 2000 records 1.06469 (Last Close)
2002-09-13 00~00
2010-05-26 00~00 (GMT+01:00) Paris
BJF Trading Group MDunleavy chart"




BJF-Trading-Group_Excel_Chart

Clearly , it may be in your best interest to spend time at the Library reading up on investing.
Good start: The Intelligent Investor by Ben Grahaqm - it's a classic.

Also read up on Warren Buffett.

This week, US data and the European bank stress test results stole most of the headlines. Canada has quietly seen their currency strengthen towards the lower part of its' recent range. Tuesday saw an increase of 25 basis points on their overnight rate. Canadian Retail Sales and Consumer Price Index printed below expectations, but the currency benefited from the stabilization of commodities. While the outlook for future rate hikes is dismal, the Canadian economy is significantly in a better position than the US.Written by FX Solutions.USDCAD strength can continue towards 1.02.

"P&F USDCAD30 Box Size 40X3 or(1.15%) HI/LO
Data 1.0744 - 1.0138 ~ 2 Month ~ 58.98 Day
Database 2048 records 1.03572 (Last Close)
2010-05-25 23~00
2010-07-23 22~30 (GMT+01:00) Paris
BJF Trading Group MDunleavy chart"

1.0760|~4O|||+_______________________________|-0.15%|6.14%
1.0720|~8O|||x_o_____________________________|0.22 %|5.74%
1.0680|~12O||x_o_+_______________+___________|0.6% |5.35%
1.0640|~16O||__o___+_____x_______x_+_________|0.97 %|4.95%
1.0600|~2OO||__o_____+___x_o_____x_o_+_______|1.34 %|4.56%
1.0560|~24O||__o_x___x_+_x_o_____x_o_x_+_____|1.71 %|4.16%
1.0520|~28O||__o_x_o_x_o_x_o_____x_o_x_o_+___|2.08 %|3.77%
1.0480|~32O||__o_x_o_x_o_x_o_____x_o_x_o_x_+_|2.46 %|3.37%
1.0440|~36O||__o___o___o_x_o_x___x_o_x_o_x_o_|2.83 %|2.98%
1.0400|~4OO||__________o_x_o_x_o_x_o_x_o_x_o_|3.2% |2.58%
1.0360|~44O||__________o___o_x_o_x_o_x_o___o_|3.57 %|2.19%
1.0320|~48O||______________o_x_o___o_x_____V_|3.95 %|1.8%
1.0280|~52O||______________o_x_____o_______V_|4.32 %|1.4%
1.0240|~56O||______________o_x___+_________V_4.69% |1.01%
1.0200|~6OO||______________o_x_+___________V_5.06% |0.61%
1.0160|~64O||______________o_+_____________V_5.44% |0.22%
1.0120|~68O||______________+_________________|5.81 %|-0.18%
Column|~72O||2_8_3_3_3_5_7_1_7_3_8_9_7_5_3_3_|
Count||~76O||______________2_________________|


BJF Trading Group. Excel Chart. Full size.

I am looking at the Canadian session’s release of indicators on Friday and I saw the CAD GDP forecast a significant gain… Would you consider this already a buy for the Loonie? What can you about this?

Hey guys!

Need your help… What do you think about the forecast for Canadian Building Permits on Thursday? I am considering this indicator to support a long position for the Loonie? Any opinions are warmly welcomed…

I remain bullish on USD/CAD.
Trade Idea: USD/Cad - Buy (Stop) at 1.0280; Target: 1.0480 ; Stop: 1.0200.
See the details on the charts.

"P&F USDCAD10080 Box Size 250X3 or(5.94%) HI/LO
Data 1.6196 - 0.9056 ~ 246.9 Month ~ 7259 Day
Database 1038 records 1.02573 (Last Close)
1990-12-02 00~00
2010-10-17 00~00 (GMT+01:00) Paris
BJF Trading Group MDunleavy chart"

1.6250|~25O||____________+________________________ _______|-0.33%|79.44%
1.6000|~5OO||________x___x_+______________________ _______|1.21%|76.68%
1.5750|~75O||____x___x_o_x_o_+____________________ _______|2.75%|73.92%
1.5500|~1OOO|____x_o_x_o_x_o___+__________________ _______|4.3%|71.16%
1.5250|~125O|____x_o_x_o___o_____+________________ _______|5.84%|68.4%
1.5000|~15OO|____x_o_x_____o_______+______________ _______|7.38%|65.64%
1.4750|~175O|____x_o_x_____o_________+____________ _______|8.93%|62.88%
1.4500|~2OOO|____x_o_____+_o___________+__________ _______|10.47%|60.11%
1.4250|~225O|x___x_____+___o_____________+________ _______|12.02%|57.35%
1.4000|~25OO|x_o_x___+_____o_x_____________+______ _______|13.56%|54.59%
1.3750|~275O|x_o_x_+_______o_x_o_____________+____ _______|15.1%|51.83%
1.3500|~3OOO|x_o_+_________o_x_o_______________+__ _______|16.65%|49.07%
1.3250|~325O|x_+___________o_x_o_________________+ _______|18.19%|46.31%
1.3000|~35OO|x_____________o_x_o_________x___x___x _+_____|19.73%|43.55%
1.2750|~375O|x_____________o___o_________x_o_x_o_x _o_+___|21.28%|40.79%
1.2500|~4OOO|x_________________o_x_______x_o_x_o_x _o___+_|22.82%|38.03%
1.2250|~425O|x_________________o_x_o_____x_o_x_o_x _o_____|24.36%|35.27%
1.2000|~45OO|x_________________o_x_o_____x_o_x_o__ _o_____|25.91%|32.51%
1.1750|~475O|x_________________o___o_x___x_o_x____ _o_____|27.45%|29.75%
1.1500|~5OOO|x_____________________o_x_o_x_o______ _o_____|28.99%|26.99%
1.1250|~525O|______________________o_x_o_x________ _o_____|30.54%|24.23%
1.1000|~55OO|______________________o___o_x________ _o_____|32.08%|21.47%
1.0750|~575O|__________________________o_x________ _o_x___|33.63%|18.71%
1.0500|~6OOO|__________________________o_x________ _o_x_o_|35.17%|15.95%
1.0250|~625O|==========================o=x=======+ =o=x=o=x36.71%|13.18%
1.0000|~65OO|__________________________o_x_____+__ _o_+_o_|38.26%|10.42%
0.9750|~675O|__________________________o_x___+____ _+___+_|39.8%|7.66%
0.9500|~7OOO|__________________________o_x_+______ _______|41.34%|4.9%
0.9250|~725O|__________________________o_+________ _______|42.89%|2.14%
0.9000|~75OO|__________________________+__________ _______|44.43%|-0.62%
Column|||||||1_3_9_5_6_3_3_1_5_9_3_6_3_1_1_6_6_4_4 _1_3_3_|
Count||||||||2_____________3___________O_5________ _2_____|



BJF Trading Group. Excel Chart. Full size.