CAD in focus on dovish comments

7 December, 2017

CAD in focus on dovish comments

The Canadian dollar was back in focus today as the market was looking for hawkish signs from the Bank of Canada, on the back of the recent interest rate statement. The interest rate was kept at 1% however, and the market was caught off guard by the dovish comments made by the BoC. While the economy has been adding new jobs and Fridays figures were a testament to that (+441,400), the BoC is still concerned about the NAFTA negotiations that are ongoing, as well as recent housing market developments. This came as a shock for a lot of market pundits, but more important it forced forecasts further out for future rate rises, while before the market was betting heavily on the BoC to come through and cause further positive betting on rate rises.

The USDCAD was quick to jump on the back of the news out from the BoC, as USD bulls rushed away with all the recent gains and pushed through resistance at 1.2759. Further levels higher can be found at 1.2921 with the potential for any higher gains to the 200 day moving average - which would be very hard to push through. If the market does turn around and head back south then support at 1.2628 and 1.2516 are likely to be the prime candidates for bearish traders, with the area between these two levels likely to act as a key selling point on the market.

Crude has been one of those funny players in the market as of late with a bullish rise, which has been purely on the back of OPEC extending production cuts. Now for many this comes as no surprise as the oil market did need to stabilise but today's fall caught many off guard given that the drawdown came in stronger than expected at -5.61M (-2.5M exp). The reason for this was refined oil products with gasoline showing an increase to 6.8M barrels, beating market expectations and causing the oil market to sell-off. Selling pressure is common when you have a build up of refined products as the market might start to think it's flagging or peaked already.   

Oil now finds itself in a weird place at present as the recent rise has struck strong resistance at 59.08 in this market, and the fall today hit the current old trend line which the market is respecting before taking a pause and stopping all together. I'm not sure if there is further potential falls on the cards given the bulls have been so strong, and this could be an excuse to unwind. However, if the trend line did break then support could be found at 55.14. If oil does indeed jump back higher, then for me resistance at 57.38 and 59.08 are the key levels traders will look to target. Expectations are though that 59.08 will be the level to beat currently. 

Source link  
US retail sales beat expectations

It's been a funny day for the USD as it slipped lower on Tax legislation worries. For the most part it has fallen around two senators who are keen...

UK jobs report in focus, Gold slips

The British Pound's appreciation against the Dollar was short lived during Tuesday's trading session as investors evaluated the likely impact...

Dollar advances ahead of NFP

The Greenback ventured to a two-week high against a basket of major currencies on Friday morning, amid investor optimism over U.S. tax reforms...

Tax bill vote fails to impress dollar bulls

Despite U.S. equities closing at new records on the tax breakthrough, it was interesting to see the dollar retreating slightly against its major counterparts.

Pound rallies on divorce bill rumours

It's been a crazy day on the markets and the GBPUSD has been a clear winner when it comes to movements today as the Market has reacted...

Dollar punished by Fed caution

The Dollar found itself vulnerable to heavy losses on Wednesday evening, after minutes from the latest FOMC meeting illustrated concerns among...

Sterling on standby ahead of UK budget

The healthy combination of rising corporate profits, strong global growth and cautious optimism over U.S. corporate tax cuts, simply reinvigorated...

Buy the dip or sell the rally?

U.S. stocks logged their fourth drop in the past five trading days, falling to a three-week low with the S&P 500 closing 1.25% below its record high on Nov 7...

Global stocks lower, UK jobs data in focus

A negative vibe was felt across financial markets during Tuesday's trading session, as the combination of tumbling oil prices and growing...