Trading plan for 12/07/2017:
The dollar does not gain any of the major pairs, which is the conclusion of FED Harker's dovish speech and the affair with Donald Trump's son. The EUR/USD is above 1.1450 and USD/JPY has made a massive return with several months' highs. Oil continues the rally as yesterday, and precious metal prices are also rising. Wall Street's downfall lasted just a few minutes yesterday and all indices were close with minor gains.
On Wednesday 12th of July, the event calendar is busy with important economic news releases. It will start with the UK presenting Claimant Count Change, Average Earning Index and Unemployment Rate data. Then Industrial Production from Eurozone will be presented. Next in schedule is Overnight Rate decision from Bank od Canada and Interest Rate Statement, Monetary Policy Report and Press Conference. And last, but not least, the Federal Reserve Chairperson Janet Yellen will speak late in the session in the US Congress.
USD/CAD analysis for 12/07/2017:
The Bank of Canada Interest Rate Decision, Interest Rate Statement and Monetary Policy Report is scheduled for release at 02:00 pm GMT and the Press Conference is scheduled at 03:15 pm GMT. The market participants do expect an interest rate hike from 0.50% to 0.75% and most of this hike had been priced in by the market already. In this situation, a much more interesting for financial market participants will be news regarding further monetary policy because this interest rate hike might be the first one in the series.
The Bank of Canada President Stephen Poloz and his colleagues have done a lot in recent weeks to prepare the market for a rate hike that is now priced in at 95%. President Poloz said that the 2016 anti-crisis cuts "did their job" and the current level of rates is "extremely low." At the same time, he and Wilkins expressed a clear optimism over the situation in the economy, particularly its improvement over 2016. An impressive increase in new jobs (last month's increase by 45,300) and a clear improvement of the business climate (the Business Outlook Survey indicator is the highest since 2011) is a solid argument for a hike.
CAD has for some time been the beneficiary of this return in the central bank's outlook, and now only a clear rise of expectations for the continuation of the tightening cycle could give a stronger impulse to strengthen the currency. It does not seem real, so "sales of facts" can hit CAD across the board.
Let's now take a look at the USD/CAD technical picture at the H4 timeframe. The market is trading in oversold conditions with a clear bullish divergence between the price and the momentum indicator. The next technical resistance is seen at the level of 1.2968 and 1.3015, so in a case of selling the fact scenario happening, this two levels might be easily violated.
Market Snapshot: Crude Oil close to 61%Fibo level
The price of Crude Oil has hit the 61%Fibo at the level of $45.90 after the API Inventories data release yesterday ( -8100k decrease in stockpiles). The price is continuing its bounce from the $43 zone, but the market conditions are starting to look overbought. In a case of a failure here, the next technical support is seen at the level of $45.64 and $45.58.
Market Snapshot: USD/JPY is falling down
The price of USD/JPY pair is falling down from the muti-month highs around the level of 114.50. Currently, the price has got back to the golden channel zone and the next technical support is seen at the level of 112.92 - 112. 74 area. The momentum indicator slide below the fifty level supports the downside bias.
