The CAD got a boost against the USD yesterday as BoC Governor Poloz poured cold water over the market’s rate cut expectations. The BoC governor stated that monetary conditions in Canada are “about right” given the current economic situation that is challenged by global trade tensions. In an interesting comment the BoC governor stated that he is starting to see a glimmer of response in global easing. Analysts noted that Poloz’s comments were strong, and we would add that they tend to predispose the market for BoC remaining on hold for a longer period. Also, the CAD may have gotten some support from rising oil prices yesterday, which allowed it to maintain its gains. The Looney is expected to zoom in on the release of Canada’s retail sales growth rates for September, yet the oil market may also influence its direction. USD/CAD dropped during the American session yesterday, distancing itself from the 1.3335 (R1) resistance line, keeping a tight range bound motion afterwards. Despite the prementioned tight range bound movement, we expected that there may be some increased volatility during the release of the retail sales growth rates for September. Should the bears control the pair’s direction, we could see it breaking the 1.3230 (S1) support line and aim for lower grounds. Should on the other hand the bulls take over, we could see the pair breaking the 1.3335 (R1) resistance line, aiming for the 1.3430 (R2) resistance level.
…while USD strengthens despite trade hopes fading away…
The USD gained against both, the safe haven Yen and the Aussie, despite headlines not looking that promising about the US-Sino relationships. Headlines about the possibility of US President Trump signing the Hong Kong bill increased, yet on a more positive note it should be noted that Beijing invited US negotiators for a new round of face to face talks. The necessity for a new round of face to face talks though, could be indicative of the negotiations being stuck at an impasse at the current stage. On other headlines, China urged the US to stop provocative acts in the South China sea, as the US Navy had two ships sail near disputed islands. We would like to repeat that the market may have been growing tired from the ongoing back and forth in the US Sino relationships and seems to maintain a more wait and see approach for more substantial developments. USD/JPY maintained a sideways motion yesterday between the 108.35 (S1) support line and the 109.00 (RR1) resistance line. We could see the pair maintaining its course in the absence of headlines about the US-Sino relationships. Should the pair come under the selling interest of the market we could see it breaking the 108.35 (S1) support line and aim for the 107.75 (S2) support level. Should the pair’s long positions be favored by the market, we could see USD/JPY aiming if not breaking the 109.00 (R1) resistance line and aim for the 109.70 (R2) resistance line.
Other economic highlights today and early tomorrow
During today’s European session, we get from Germany the detailed GDP growth rate for Q3 and France’s Germany’s and Eurozone’s preliminary PMI’s for November. Also during the European session, we get UK’s first preliminary PMI’s for November. In the American session, we get Canada’s retail sales growth rates for September, the US Preliminary PMI’s for November, the final university of Michigan consume sentiment and the Baker Hughes active oil rig count for last week. As for speakers, please be advised that ECB’s President Christine Lagarde is to speak during the European session, in a banking conference in Frankfurt, Germany.
USD/JPY 4 Hour
Support: 108.35 (S1), 107.75 (S2), 107.10 (S3)
Resistance: 109.00 (R1), 109.70 (R2), 110.50 (R3)
USD/CAD 4 Hour
Support: 1.3230 (S1), 1.3125 (S2), 1.3025 (S3)
Resistance: 1.3335 (R1), 1.3430 (R2), 1.3545 (R3)
