The Canadian Dollar spiked higher on Monday after a Bank of Canada official said growth had improved in the economy and there were encouraging signs it is broadening across the country. Carolyn Wilkins Deputy Governor of the BOC said an assessment would need to take place about whether or not the current monetary policy program was accommodative given the economy appeared to have strengthened recently. The market immediately took this to mean the BOC would lean towards lifting interest rates in the coming 12 months and may give more forward guidance in its next policy statement in July. Central Banks usually like to give plenty of forward guidance about interest Rate adjustments and Ms. Wilkins statement on Monday was about as clear a sign as you could get that the next rate adjustment will likely be up. Provided the price of Oil does not drop sharply I expect the Canadian Dollar to continue to strengthen over the coming quarters on the back of the market’s expectation for higher rates.
Following are two charts, the USD v CAD Daily Chart which shows the daily candle closing as an engulfing candle to the downside and also closing below the 200 EMA. I have also inserted a pic of the USD v CAD 4-hour chart, which clearly shows a Wave cycle to the downside. There was an Order Sheet Wave trade entry last Wednesday 7/6/17. In today’s Trading Tip I also provide another example of an Order Sheet Wave Trade entry for the AUD v JPY.
The Pound remains under pressure following last Thursday’s UK election which saw Theresa May’s Conservative Party fail to get the majority government she expected. There is currently political and economic risk hovering over the UK with some suggesting May ought to resign, as a cloud of uncertainty now hangs over how the UK will negotiate Brexit without one political party having a majority government. The past few days events don’t change my longer-term view that the UK will weather the current storm and prosper into 2018 with the Bank of England raising rates in the back half of the year and the Pound continuing to rise against its weaker rivals.
Looking ahead the market expects on Wednesday that the US Federal Reserve will lift the official cash rate another 0.25%. The US Dollar continues to struggle under the weight of Donald Trump’s political woes and this has helped the Aussie and Kiwi Dollars back higher in the short term. Today sees a NAB Consumer Confidence report for Australia, UK CPI data and an economic sentiment survey for Germany. There is no high impacting economic data scheduled for the US trading session.
About the Author: Andrew Barnett
Andrew is a professional trader and successful investor who has a strong focus on education. He is a regular Sky News Money Channel Guest and one of Australia’s most awarded and respected financial experts, and is regularly contacted by the Australian Media for the latest on what is happening with the Australian Dollar. Director at LTG GoldRock, Andrew Barnett, guides thousands of traders around the world in the live market on a daily basis, advising them on buy and sell directions, as well as trading his own personal account. Andrew, a regular key-note speaker at trading and wealth-creation events throughout the Asia Pacific region, is an authorized representative registered with the Australian Securities and Investment Commission (ASIC).
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