USD / CAD: interest rates unchanged_22/10/2015

Trading recommendations

Buy Stop 1.3150. Stop Loss 1.3090. Take-Profit 1.3200, 1.3250

Sell ​​Stop 1.3060. Stop-Loss 1.3110. Take-Profit 1.2965, 1.2890, 1.2810


Overview and Dynamics

On the decision of the Bank of Canada left its key interest rate unchanged at 0.5% in the course of yesterday's meeting of the strengthening Canadian dollar responded in 20 points, but by the end of the day USD / CAD pair rose more than 150 points for the opening day.

Despite the fall in oil prices, the country's economy, according to the bank is restored.

However, the forecast for economic growth in Canada for 2016, 2017 has been lowered. Weak investment companies will constrain economic growth in 2016, while investments in the energy sector is forecast to decline by 20%. It is expected that inflation will remain below the target level of 2% before 2017, and to maintain its growth in the Bank of Canada will be inclined to hold soft monetary policy. The growth of GDP in Canada is forecast the bank will be 2.5% in 2016 and 2.5% in 2017. Full utilization of the Canadian economy is now possible not earlier than in 2017.

After the publication of the ECB's decision on interest rates in the euro area, in 12:30 (GMT) will be published data on the number of applications for unemployment benefits in the US for the last week of October (according to the forecast of 265,000, which is 10,000 more than in the previous period) as well as data on the level of retail sales in Canada in August (forecast 0.1% growth in the previous month). At 15:30 also held a press conference the ECB's monetary policy in the euro area.

The volatility in the dollar pairs, including a pair in the USD / CAD during this time will be increased.

At 17:00 published index of leading indicators of US economic growth in September as a whole (according to the forecast growth of 0% in August).


Technical Analysis

Since the beginning of the month USD / CAD pair in Corrective weakness reached the key support level 1.2860 (38.2% Fibonacci level of correction to growth from the level of 1.1955 the May lows). This level was broken up in the price of mid-July, on the decision of the Bank of Canada to lower its key interest rate in the country. The level also corresponds to the March highs and the end of a wave of growth from the level of 1.0650 the beginning of July 2014.

Yesterday the pair rose sharply breaking through the level 1.3075 (23.6% Fibonacci level). The level is the key under the trade strategy at the Fibonacci levels. Securing the pair above 1.3075 pair finally return to the upward trend and headed towards recent highs 1.3400.

End of this level will continue corrective decline to the growth of the pair to the 1.3450 highs of the year from the level of 1.0650. While declining oil prices, the Canadian dollar will be under pressure, regardless of other economic indicators in Canada.

OsMA and Stochastic indicators recommended long positions on the daily chart, though

4-hour chart signals a reversal appeared on short positions. Break of 1.3075 level, 1.3090 (EMA200, EMA144 on 4-hour chart) will send the pair to the level of 1.2860 (38.2% Fibonacci level).