Sample Category Title

As expected, BOC left its overnight rate unchanged at 0.5% in January. Yet, it delivered a more dovish than expected message and sent CAD to a one-week low against USD. At the press conference, Governor Stephen Poloz revealed that 'Governing Council was particularly concerned about the ramifications of U.S. trade policy, because it is so fundamental to the Canadian economy'. He suggested that further rate cut cannot be ruled out of US' protectionist policy puts BOC's inflation target at risk.

Both the accompanying statement and Poloz's opening statement at the press conference stressed the uncertainty about the global economic outlook is a concern to Canada's growth outlook and BOC's monetary policy stance. As noted in the meeting statement, 'uncertainty about the global outlook is undiminished, particularly with respect to policies in the United States'. Poloz elaborated at the press conference that the members were 'particularly concerned about the ramifications of US trade policy, because it is so fundamental to the Canadian economy'. Yet, BOC's initial assumption was that fiscal stimulus, 'specifically, corporate and personal tax cuts that would raise the level of US GDP by about 0.5% in 2018'. On the exchange rate, BOC acknowledged the recent strength in Canada dollar, alongside the USD rally, warning that the phenomenon is 'exacerbating ongoing competitiveness challenges and muting the outlook for exports'.

On the macroeconomic outlook, BOC expect the economy to expand above trend in 2017 and 2018. It has revised higher Canada's GDP growth to +1.3% in 2016, from +1.1% previously, before accelerating to +2.1% in 2017 (previous: +2%) and steadying at the same rate in 2018. BOC continues to expect the economy to reach full capacity around mid-2018. Consumer spending would remain 'solid' and would remain the key growth driver this year, with the help of Federal and provincial fiscal measures. Net trade is expected to be neutral for growth, while business investment and housing would be 'tempered by previously announced changes to housing finance rules and by mortgage rates that have risen in response to higher bond yields'. While acknowledging the undershooting of inflation since October, BOC did not seem very concerned about slow pace. According to BOC, 'as consumer energy prices rise and the impact of lower food prices dissipates, inflation is expected to move close to the 2% target in the months ahead and remain there throughout the projection horizon while excess capacity is being absorbed'.

BOC judged that it is appropriate to maintain the overnight rate at 0.5% and pledged to 'assess the impact of ongoing developments, mindful of the significant uncertainties weighing on the outlook'. At the press conference, Poloz pledged that a rate cut remains on the table and 'it would remain on the table as long as those downside risks were still present'. For now, we retain the view that BOC would leave the monetary policy on hold throughout the year.

Daily Pivots: (S1) 139.56; (P) 140.12; (R1) 141.10; More...

Intraday bias in GBP/JPY remains neutral for the moment with a temporary low in place at 136.44. Deeper decline is still expected with 142.16 support turned resistance intact. Whole corrective rise from 122.36 could have completed at 148.42. Below 136.44 will target 61.8% retracement of 122.36 to 148.42 at 132.31 and below. Though, above 142.16 will turn focus back to 148.42 high instead.

In the bigger picture, price actions from 122.36 medium term bottom are seen as developing into a corrective pattern. Upside is so far limited by 38.2% retracement of 195.86 to 122.36 at 150.4 for setting the medium term range. At this point, we don't expect a break of 122.36 in near term and the corrective pattern would extend for a while.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 120.95; (P) 121.46; (R1) 122.37; More...

A temporary low is in place at 120.54 in EUR/JPY after drawing support from 55 day EMA and intraday bias is turned neutral first. Break of 122.41 will argue that the correction from 124.08 has completed. More importantly, that will indicate that rebound from 109.20 is still in progress. In that case, intraday bias will be turned to the upside for 124.08 and then 126.09 key resistance. Below 120.54 will bring deeper fall to 118.45 cluster support (38.2% retracement of 109.20 to 124.08 at 118.39).

In the bigger picture, price actions from 109.20 medium term bottom are seen as part of a medium term corrective pattern from 149.76. There is prospect of another rise towards 126.09 key resistance level before completion. But even in that case, we'd expect strong resistance between 126.09 and 141.04 to limit upside, at least on first attempt. Sustained trading below 55 day EMA will pave the way to retest 109.20.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 0.8758; (P) 0.8804; (R1) 0.8847; More...

Intraday bias in EUR/GBP remains neutral for the moment. Rise from 0.8303 is seen as a corrective move, the second leg of consolidation pattern from 0.9304. In case of another rise, break of 61.8% retracement of 0.9304 to 0.8303 at 0.8922 would be seen. But we'll be cautious on topping above 0.8922. On the downside, break of 0.8449 will likely start the third leg through 0.8303 low.

In the bigger picture, price actions from 0.9304 are viewed as a medium term corrective pattern. Deeper fall cannot be ruled out yet. But we'd expect strong support around 55 weeks EMA (now at 0.8260) to contain downside. Overall, the corrective pattern would take some time to complete before long term up trend resumes at a later stage. Break of 0.9304 will pave the way to 0.9799 (2008 high).

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 1.4119; (P) 1.4154; (R1) 1.4194; More...

No change in EUR/AUD's outlook. At this point, there is no clear indication of resumption of larger decline yet. Above 1.4332 support turned resistance will turn bias back to the upside to extend recent sideway trading. Nonetheless, decisive break of 1.4072 low will extend the correction from 1.6587 towards next key support level 1.3671.

In the bigger picture, price actions from 1.6587 medium term top are viewed as a consolidative pattern. 50% retracement of 1.1602 to 1.6587 at 1.4095 was already met. While further fall cannot be ruled out, we'd expect strong support above 1.3671 to contain downside and bring rebound. Up trend from 1.1602 should not be finished and will resume later. Break of 1.4880 resistance will be the first sign of resumption of up trend from 1.1602 and target retesting of 1.6587 resistance first.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 1.0695; (P) 1.0714; (R1) 1.0726; More...

Intraday bias in EUR/CHF remains neutral for the moment as it's bounded in range of 1.0677/0762. Below 1.0677 will extend the corrective fall from 1.1198 and target 1.0620 key support level. On the upside, above 1.0762 will turn focus back to 1.0897 resistance. Decisive break there will suggest reversal and turn near term outlook bullish.

In the bigger picture, the decline from 1.1198 is seen as a corrective move. Such correction is still in progress and retest of 38.2% retracement of 0.9771 to 1.1198 at 1.0653 could be seen. Sustained trading below 1.0653 will target 50% retracement at 1.0485. Meanwhile, break of 1.0897 resistance will argue that the larger up trend is finally resuming for above 1.1198.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 1.2205; (P) 1.2308; (R1) 1.2364; More...

With 1.2188 minor support intact, rebound from 1.1986 could still extend higher through 1.2432 resistance. But still, such rise is seen as the third leg of the consolidation pattern from 1.1946. Thus, we'd expect strong resistance at 1.2774 to limit upside and bring down trend resumption eventually. On the downside, below 1.2188 minor support will turn bias to the downside for retesting 1.1946 low.

In the bigger picture, fall from 1.7190 is seen as part of the down trend from 2.1161. There is no sign of medium term bottoming yet. Sustained trading below 61.8% projection of 2.1161 to 1.3503 from 1.7190 at 1.2457 will target 100% projection at 0.9532. Overall, break of 1.3444 resistance is needed to confirm medium term bottoming. Otherwise, outlook will remain bearish.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 1.0028; (P) 1.0051; (R1) 1.0096; More.....

With 1.0135 minor resistance intact, deeper fall could be seen in USD/CHF. Rise from 0.9443 could have completed at 1.0342 already, after failing to sustain above 1.0327 key resistance. Deeper fall would be seen back to 0.9443/9548 support zone. On the upside, above 1.0135 minor resistance will turn focus back to 1.0342 resistance instead.

In the bigger picture, rejection from 1.0327 resistance suggests that consolidation pattern from there is still in progress. Fall from 1.0342 is seen as the third leg and retest of 0.9443/9548 support zone could be seen. But we'd expect strong support from there to contain downside. At this point, we're still extend the larger rally to resume later to 38.2% retracement of 1.8305 to 0.7065 at 1.1359.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 113.21; (P) 113.98; (R1) 115.40; More...

Intraday bias in USD/JPY is turned neutral with a temporary low formed at 112.56. Fall from 118.65 is seen as a corrective move. In case of another fall, we'd expect strong support from 38.2% retracement of 98.97 to 118.65 at 111.13 to contain downside and bring rebound. Above 115.43 minor resistance will turn bias to the upside for retesting 118.65 high. However, sustained break of 111.13 will argue that whole rise from 98.97 has completed and bring deeper fall to 61.8% retracement at 106.48 and below.

In the bigger picture, price actions from 125.85 high are seen as a corrective pattern. The impulsive structure of the rise from 98.97 suggests that the correction is completed and larger up trend is resuming. Decisive break of 125.85 will confirm and target 61.8% projection of 75.56 to 125.85 from 98.97 at 130.04 and then 135.20 long term resistance. Rejection from 125.85 and below will extend the consolidation with another falling leg before up trend resumption.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box

Daily Pivots: (S1) 0.7482; (P) 0.7524; (R1) 0.7545; More...

No change in AUD/USD's outlook. With 0.7448 minor support intact, rebound from 0.7158 could extend higher towards 0.7777/7833 resistance zone. But still, we'd still expect strong resistance from this zone to limit upside. On the downside, below 0.7448 minor support will turn bias back to the downside for 0.7144 key support level.

In the bigger picture, AUD/USD is staying inside long term falling channel and it's likely that the down trend from 1.1079 is still in progress. Break of 0.6826 low will confirm this bearish case. We'll be looking for bottoming sign again as it approaches 0.6008 key support level. Meanwhile, sustained break of 0.7833 resistance will be a strong sign of medium term reversal.

Subscribe to our daily and mid-day newsletter to get this report delivered to your mail box