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The currency pair has managed to stay above the 50% retracement level after the last two breakdown attempts. It could move sideways in the upcoming days and could even increase a little if the dollar index will slip lower after the impressive rally. However, technically is expected to drop further after the breakdown below the sliding line (sl), but maybe after a retest of the broken line.

The currency pair rallied aggressively in the afternoon and reached fresh new highs after the BOC Poloz's speech. Price has managed to erase the Tuesday's losses and to resume the upside momentum. USD/CAD has jumped above some important resistance levels, but the breakout needs confirmation.

Technically, we may have a minor consolidation here, it could come to retest the broken levels if the USDX will slip lower in the upcoming days.

The USDX climbed as much as 93.61 level, where has found temporary resistance again. The index is bullish on the short term, but remains to see how long this rebound will be because personally, I'm expecting to see a minor decrease after the current rally.

You should know that we may have a high volatility in the afternoon after the United States data will be released.

Price has jumped much above the median line (ml) of the blue ascending pitchfork and now stand above the 1.2460 static resistance as well. Has changed little in the first 30 minutes of the Asian session, but most likely will have a significant move later in the afternoon when the fundamental factors will take the lead again.

Is still under some pressure despite the minor increase because is trapped within the descending pitchfork's body, only a valid breakout from it will confirm a larger rebound in the upcoming period. Personally, I believe that will take out the dynamic resistance from the upper median line (uml) if will touch it in the upcoming days.

The RBNZ held rates unchanged as largely expected but it was the BOC's Poloz that surprised with a less hawkish message. The US dollar was the top performer Wednesday while the Canadian dollar lagged. The RBNZ left rates unchanged. The Pre-Fed EURUSD Premium short hit its final 1.1730 target for 180-pip gain. A new trade has been issued.

The RBNZ left the official cash rate at 1.75% and said a lower New Zealand dollar would help the economy. That's a slight downgrade in the jawboning but the main message that monetary policy will remain accommodative for a considerable period was unchanged. Kiwi slipped on the headlines but the overall message was largely priced in.

A central bank that has kept the market off balance has been the Bank of Canada. That's in part because of a lack of communication since the tightening cycle began. The market had been pricing in a 38% chance of a hike in October and a 68% chance of higher rates in December.

That's looking far less likely after Poloz signaled a wait-and-see stance. He said the BOC will proceed cautiously from here while repeatedly emphasizing uncertainties and data dependence. In particular, he highlighted that the BOC wanted to see the effects of the rate hikes, the government's housing measures and the rise in the exchange rate. That's going to take time and means October is off the table, barring a string of great economic data points.

Outside of Poloz, the theme on the day was US dollar strength led by a selloff on Treasuries. Republicans announced some details of the tax plan and that helped stocks along with some minor deficit worries. USD/JPY rose as high as 113.26 before fading to 112.80.

Meanwhile, we had highlighted downside risks for EUR/USD and it fell to 1.1717, a one month low.

Looking ahead, the euro will be in particular focus in the day ahead with German CPI numbers coming up.

The Canadian dollar was lower on Wednesday after the Bank of Canada (BoC ) Governor delivered a speech in Newfoundland. Governor Stephen Poloz said that there is no predetermined path for interest rate and that the central bank would proceed with caution. The rhetoric was less hawkish that his comments in June and July. Unknowns are making estimating the appropriate rate path hard, but then again that has been the situation in all of 2017. The loonie has been one of the best performers this year after the two rate hikes, but has lost momentum after the Fed has signalled a third rate hike of the Fed funds rate. The comments from the BoC indicate a slower rate path that could see the central bank standing pat for the remainder of the year.

The Canadian economy is the fastest growing out of the Group of Seven which explained the quick turnabout from the central bank regarding rates. In June senior policymakers started dropping heavy hints about an upcoming rate hike, which materialized in July. The BoC was quiet ahead of September and with the market estimating a rate move in October it was caught by surprise by the rate hike announcement. Economists criticized the central bank for their lack of communication. The Canadian rate stands at 1.00 percent the same as in 2015 before Governor Poloz made two proactive cuts ahead of a steep fall in oil prices.

NAFTA negotiations are one of the unknowns that was not called out by name by Poloz on Wednesday. While the US and Mexico want a speedy resolution ahead of elections in both nations it is Canada who has been hit by intimidation tactics. The first one was the lumber tariffs imposed earlier in the year and now it is Canadian company Bombardier that will have to pay 220 percent duty on its CSeries planes. The move was also condemned by UK Prime Minister Theresa May and is threatening with retaliation. Bombardier employs 4,000 in Northern Ireland and given the importance of the Democratic Unionists in forming a Conservative government after the fiasco of the snap election results.

The USD/CAD lost 0.021 in the last 24 hours. The currency pair is trading at 1.2374 ahead of the US President Donald Trump speech outlining his tax reform. The USD failed to capitalize on a hawkish speech by Fed Chair Janet Yellen yesterday putting a December rate hike for the US benchmark firmly on the table. Yellen issued a warning that waiting for inflation to pick up could be a big mistake. The Canadian dollar appreciated earlier in September when the Bank of Canada (BoC) surprised markets with a 25 basis points rate hike. The Canadian central bank governor

The central bank was quiet ahead of announcing the monetary policy decision in stark contrast with the July meeting when it gave the market a clear heads up on its intentions. The market was expecting the 25 basis points rate hike to come in October, but the BoC thought it best to do it sooner rather than later with no warning. Poloz's speech will be filled with the bank's assessment of the economy that prompted the BoC to make that decision.

Later in the week the monthly GDP figures will be announced which could validate Mr Poloz's eagerness to hike. A slowdown in growth could also raise question marks about his decision given that as expected the European Central Bank (ECB) and the U.S. Federal Reserve did not touch their benchmark rates. The Fed did finally announce the details of its balance sheet reduction program. December will be once again host the most important meetings of the year for most central banks. The Fed could hike a third time, but it all depends on the economic performance in the third quarter.

US oil rose 0.923 on Wednesday. The price of West Texas Intermediate is trading at $51.72 after the Energy Information Administration (EIA) released the weekly inventory numbers. Crude stocks printed a surprise drawdown of 1.8 million barrels. This is the first decline in four weeks for crude inventories and a strong signal that refineries in the US are back online. Gasoline stocks climbed 1.1 million barrels also beating expectations of a 100,000 barrel drawdown. US refiners are running at a 88.6 percent capacity.

Energy analysts are hopeful of strong demand for energy in the coming years, but so far only supply disruptions have made energy prices rise. The hurricanes in the US and the ongoing situation in Northern Iraq will keep prices higher until they are sorted. The US energy sector seems to have shaken off the impact of the two hurricanes and is well on its way to full capacity ahead of the winter season. The geopolitics in Iraq will bring volatility to crude as global supply could be affected by the Kurdish region wishing to form its own state. The Iraqi central government and allies like Turkey have already warned about the retaliatory measures they will take on the result of the referendum. Turkey has said that it would cut off the pipeline carrying Kurdish oil to make if they do not desist.

Gold has posted losses on Wednesday, continuing the downward trend move which marked the Tuesday session. In North American trade, the spot price for an ounce of gold is $1285.39, down 0.58% on the day. Gold has now slipped 1.9 percent since Tuesday, and is currently trading at its lowest level since August 25. On the release front, key indicators were mixed. Durable Good Orders sparkled with a 1.7% gain, well above the estimate of 1.0%. Core Durable Goods slowed to 0.2%, matching the estimate. Pending Home Sales was unexpectedly soft, posting a decline of 2.5%, compared to an estimate of -0.5%. The US will release two key events – Final GDP and unemployment claims.

What can we expect from the Federal Reserve with regard to interest rate policy? Fed policymakers remain divided on the hot issue of a third and final rate hike in 2017. Fed Chair Janet Yellen waded into the rate debate on Tuesday, as she sent out a surprisingly hawkish message to the markets. Yellen said that she favored gradual rate increases, and voiced confidence that inflation levels would move higher. She added that if the Federal Reserve did not continue to raise rates, the red-hot labor market could become overheated, potentially causing a recession. Yellen appeared to echo sentiments voiced by New York Fed President William Dudley, who made a strong case for raising rates on Monday. Dudley cited a soft US dollar and strong global growth as reasons why inflation would increase and also translate into stronger wage growth. Dudley said he expects inflation to reach the Fed's target of 2 percent in the "medium term", and predicted that the Fed would continue to gradually remove monetary accommodation. However, Chicago Fed President Charles Evans sent out a very different message, calling on the Fed to avoid another rate hike until wage and inflation levels moved higher. Evans said that inflation, which is running at around 1.4 percent, is too low, and wants to see "clear signs" that prices are moving higher before the Fed presses the rate trigger. For their part, the markets are more confident in a December move – the CME Group has pegged the odds of a December raise at 81%, while the odds were mired below 50% just a few weeks ago.

At last week's policy meeting, the Fed stayed on the sidelines and maintained the benchmark rate at 1.25%. There was dramatic news, however, as the Fed made its long-awaited announcement that it would reduce its $4.2 trillion balance sheet by $50 billion/mth, starting in October. Commenting on the decision to taper the balance sheet, FOMC member John Williams said last week that he did not "anticipate any sudden or large effects on rates or spreads", but acknowledged that the Fed could not predict how the markets would react, and policymakers would have to monitor market reaction to the reduction in the balance sheet. The reduction in the balance sheet can be viewed as a mini-rate hike, so if the Fed sticks to its plan of monthly tapers, the US dollar could gain ground against its major rivals.

The British pound continues to head lower this week, and has posted losses in the Wednesday session. In North American trade, GBP/USD is trading at 1.3407, down 0.38% on the day. On the release front, British CBI Realized Sales soared with a reading of 42, crushing the estimate of 6 points. In the US, data was mixed. Durable Good Orders sparkled with a 1.7% gain, well above the estimate of 1.0%. Core Durable Goods slowed to 0.2%, matching the estimate. Pending Home Sales was unexpectedly soft, posting a decline of 2.5%, compared to an estimate of -0.5%. On Thursday, BoE Governor Mark Carney will speak at a BoE conference in London. The US will release two key events – Final GDP and unemployment claims.

Federal Reserve policymakers remain divided on the hot issue of another rate hike in 2017. Fed Chair Janet Yellen waded into the rate debate on Tuesday, as she sent out a surprisingly hawkish message to the markets. Yellen said that she favored gradual rate increases, and voiced confidence that inflation levels would move higher. She added that if the Federal Reserve did not continue to raise rates, the red-hot labor market could become overheated, potentially causing a recession. On Monday, New York Fed President William Dudley also made a strong case to raise rates. Dudley cited a soft US dollar and strong global growth as reasons why inflation would increase and also translate into stronger wage growth. Dudley said he expects inflation to reach the Fed's target of 2 percent in the "medium term", and predicted that the Fed would continue to gradually remove monetary accommodation. However, Chicago Fed President Charles Evans sent out a very different message, calling on the Fed to avoid another rate hike until wage and inflation levels moved higher. Evans said that inflation, which is running at around 1.4%, is too low, and wants to see "clear signs" that prices are moving higher before the Fed presses the rate trigger. For their part, the markets are more confident in a December move – the CME Group has pegged the odds of a December raise at 81%, while the odds were mired below 50% just a few weeks ago.

The Brexit saga continues, as negotiations between Britain and the European Union have been testy and tense, with little headway on a range of issues that must be resolved as part of the divorce process. Given this background, it was no surprise that European Council President Donald Tusk acknowledged on Tuesday that the two sides had not made enough progress to move to trade discussions. The May government is eager to discuss trade relations with Europe in a post-Brexit era, but the EU has conditioned trade talks on "sufficient progress" being made regarding the amount of Britain's bill to leave the EU, the legal status of EU citizens living in the UK and the border between the UK and Ireland. The two sides remain far apart on these key issues, so it appears that the May government will have little choice but to move closer to the European position before it can talk trade. Adding to the uncertainty, the British government itself is divided on its Brexit policy. Hawkish cabinet members, such as foreign secretary Boris Johnston, have consistently put forward a harder line towards the Europeans than has Prime Minister May, and it's difficult to see how negotiations can move forward before the May gets her own house in order.

Hawkish remarks by Fed Chair Yellen on Tuesday continued supporting the dollar against its major rivals during European trading as markets were more confident now that the Fed would deliver another rate hike in December. Investors were also cautious to hear whether the US tax overhaul plan announced later today would be Trump's first major legislative achievement since his election, a day after his proposals to repeal Obamacare failed to pass yet again.

The dollar index breached again the 93 key level during the European session, last trading at 93.23, as the odds for a third-rate hike to be delivered in December rose to more than 80% today compared to approximately 40% a month ago after the Fed Chair, Janet Yellen, said in Cleveland on Tuesday that rates should rise gradually despite the weakness in inflation.

Investors were also optimistic about the US tax reforms expected to be announced by Trump's administration and Republicans in Congress today at 1920GMT. After a multi-month process of preparing the tax outline, Republicans are said to propose for pass-through tax rates to drop to 25% from the current 39.6% and corporate tax rates to decrease from 35% to 20%. According to rumors though, details on how these tax cuts would be delivered without increasing the federal deficit would be limited.

Moreover, US durable goods orders for the month of August recovered after a sharp fall in the previous month, rising by 1.7% m/m, more than the forecast of 1.0%. The core equivalent measure came in as projected at 0.2%, below the 0.8% recorded in July (upwardly revised from 0.5%).

Regarding August's US pending home sales, those declined steeply by 2.6% m/m, posting the biggest fall since February. Expectations were for the figures to decline by 0.5% after a 0.8% fall in July. On Thursday, readings on final US growth rates for the second quarter will be also released.

Since North Korea did not proceed with any provocative actions after Trump's latest comments, demand for safe-haven assets eased further. Dollar/yen surged to a 2 ½-month high of 113.22, while dollar/swissie advanced to a near 4-month high of 0.9755. In other safe-haven assets, yields on US 2-year treasuries reached the highest level since October 2008 and gold dipped to a one-month low of $1,283.68 per ounce.

The euro bottomed to a near 6-week low of $1.1723 as political stability is put to question in Germany after Sunday's federal elections and as the dollar continued strengthening. In other news, the ECB's bank supervisor Danièle Nouy argued that Europe's banking sector may likely need to shrink as it has grown significantly.

The pound retreated to a two-week low of $1.3394, while the key event this week for the pound will be the BOE Governor Mark Carney's speech on Thursday.

In New Zealand, RBNZ policymakers are scheduled to gather later today to decide on interest rates, which are projected to remain steady at a record low of 1.75% until the end of the year. The kiwi was moving sideways during the session near a 3-week low of $0.7200 as political uncertainty is weighing on the currency, with the leader of the opposition party saying that coalition agreements will not be made until October 7.

The aussie extended its losses for the third day reaching a six-week low of $0.7835 on the back of a stronger dollar and decreasing metal prices.

In Canada, the BOC Governor Stephen Poloz will release a report on the country's economic conditions and hold a news conference at 1545GMT. Traders will be eager to hear whether the BOC is willing to continue tightening its monetary policy after two consecutive rate hikes. Dollar/loonie was up by 0.29% on the day at 1.2380.

In energy markets, oil prices hit lower despite the EIA report showing that US crude oil inventories declined by 1.846mn barrels the past week while analysts anticipated oil inventories to increase by 3.422m barrels. Gasoline inventories, though, rose by 1.107m barrels instead of falling by 0.921m as expected. Gasoline production was also up by 0.062m barrels. On the day, WTI crude traded 0.4% lower at $51.64 per barrel, while Brent was 1.1% down at $57.80.

USD/CHF - 0.9745

Most recent candlesticks pattern : N/A

Trend                                    : Near term up

Tenkan-Sen level                  : 0.9749

Kijun-Sen level                    : 0.9726

Ichimoku cloud top                 : 0.9695

Ichimoku cloud bottom              : 0.9694

Original strategy :

Bought at 0.9685, Target: 0.9785, Stop: 0.9710

Position : - Long at 0.9685

Target :  - 0.9785

Stop : - 0.9710

New strategy  :

Hold long entered at 0.9685, Target: 0.9785, Stop: 0.9710

Position : - Long at 0.9685

Target :  - 0.9785

Stop : - 0.9710

As the greenback did find renewed buying interest at 0.9681 (we recommended to buy at 0.9685 and a long position was entered) and has rallied in line with our bullish expectation, retaining our upside bias for recent upmove from 0.9421 low to to extend gain to 0.9773 resistance, however, break of this level is needed to bring further rise towards 0.9800-10 which is likely to hold from here due to near term overbought condition.

In view of this, we are holding on to our long position entered at 0.9685. Only below said support at 0.9681 would abort and signal top is formed instead, bring correction of recent rise towards support at 0.9642 which is likely to hold on first testing.

GBP/USD - 1.3404

Most recent candlesticks pattern   : N/A

Trend                                 : Up

Tenkan-Sen level                 : 1.3397

Kijun-Sen level                    : 1.3414

Ichimoku cloud top              : 1.3500

Ichimoku cloud bottom        : 1.3467

Original strategy :

Sell at 1.3500, Target: 1.3380, Stop: 1.3535

Position : -

Target :  -

Stop : -

New strategy  :

Sell at 1.3500, Target: 1.3380, Stop: 1.3535

Position : -

Target :  -

Stop : -

As cable has rebounded after falling to 1.3364 earlier today, suggesting minor consolidation above this level would be seen and corrective bounce to 1.3455-60 cannot be ruled out, however, reckon upside would be limited to 1.3500 and bring another decline later, below said support at 1.3364 would extend recent decline from 1.3658 top to 1.3345-50 (61.8% Fibonacci retracement of 1.3153-1.3658) and possibly towards previous resistance at 1.3329. 

In view of this, would not chase this fall here and would be prudent to sell cable on further recovery as 1.3500 should hold. Above resistance at 1.3514 would defer and risk a stronger rebound to 1.3535-40 but resistance at 1.3571 should remain intact.

August durable goods orders rose 1.7 percent, in part due to another strong month for aircraft. Core orders, however, rose 0.9 percent and suggest solid equipment spending in the second half of the year.

Ear Protection Area: Aircraft Still Noisy

Durable goods orders suggest that the manufacturing sector continues to gain momentum. New orders rose 1.7 percent in August, beating market expectations for a 1.0 percent gain. The increase follows two particularly choppy months where aircraft orders led to more than a six percent jump in June that was immediately unwound in July. The noise was dialed down somewhat in August, but 33 new orders from Boeing led to a 44 percent rise in the value to aircraft orders over the month.

Outside of aircraft, gains were more modest. Orders for vehicles and parts snapped a two month string of declines and rose 1.5 percent. We are just now coming out of the summer shutdown season, in which the timing and length of stoppages have become more varied in recent years. Therefore, we are cautious to read too much into the August gain, particularly as auto sales have struggled over the past year. Orders for new vehicles and parts have largely moved sideways over the past year and are up only 0.9 percent from last August.

Positive Momentum Heading into the End of the Year

Excluding transportation, orders rose 0.2 percent. That was in line with expectations, but the increase came on the heels of an upward revision to July. The real strength in today's report, however, lies in new orders for nondefense capital goods ex-aircraft. This measure of "core" orders rose 0.9 percent (also on the heels of a modest upward revision to July). Some of that strength can be traced to machinery and primary metals, but orders for communications equipment rose an impressive 4.0 percent last month.

Core orders are now running at an average annualized pace of 6.4 percent over the past three months, similar to the pace registered early in the year. Momentum looks to have carried forward in September. The regional purchasing managers' indices released thus far this month have all improved, with new orders expanding at a faster clip according to the New York, Philadelphia, Richmond and Dallas Fed manufacturing surveys.

Shipments Point to Another Good Quarter for Equipment

Shipments of durable goods edged up 0.3 percent in August despite a pullback in the aircraft industry. While aircraft is excluded from our preferred measure of core orders due to the long lead time, shipments for the industry are still useful in gauging the strength of current outlays for equipment in the GDP report. Non-defense capital goods shipments are up at a 9.2 percent annualized pace thus far in the third quarter. That sits well with our call for another solid quarter of equipment spending. We currently have penciled in a 6.9 percent rise in equipment spending for the current quarter, while the strength of core orders is pointing to a similarly strong rise in the fourth quarter.