Market Analysis: 26 September, 2016
BoJ Kuroda Speech
The Governor of the Bank of Japan had a speech at a meeting with business leaders in Osaka, “Comprehensive Assessment of the Monetary Easing and QQE with Yield Curve Control”. Haruhiko Kuroda highlighted that the Bank is pursuing innovation. According to Mr Kuroda, the current situation dictates a need of further easing measures, such as rate cut and a lower long term rate. The Bank will maintain a large scale monetary easing until the CPI remains stable above 2% and the monetary policy can be expanded to further asset purchases if this is deemed necessary.
Major oil producers, OPEC and non-OPEC members, will have a meeting in Algeria hoping to reach a conclusion on a potential output freeze deal. Oil prices are trending based on commentaries regarding the potential deal, surging upon a positive comment and plummeting upon a less supportive input for the deal. The meeting is expected to be concluded later this week, on Wednesday. We anticipate high volatility on USDCAD based on comments from the meeting until the announcement of the official conclusion.
There is a busy week ahead with scheduled speeches from Mario Draghi, Bank of Canada Governor Stephen Poloz, Janet Yellen and other FOMC members. Today at 16:30 we are expecting the speech of the President of the Minneapolis Bank Neel Kashkari, then the ECB president and vice president Vitor Constancio speeches, at 18:45 Fed board governor Daniel Tarullo speaks on “Next steps in the evolution of stress testing” and at 20:30 FOMC member Robert Kaplan will participate in moderated Q&A before the independent Bankers Association of Texas Annual Convention. Tomorrow during the Asian morning Poloz will give a speech at Western Washington University Bellingham. Moreover, today at 17:00 server time we are looking at US monthly New Home Sales Index which is expected lower than July’s figure.
The Gopher is still trading below the downtrend line on the daily timeframe which at the moment of writing coincides with SMA50. The next valid support level to be reached on this time frame is the psychological level of 100. MACD is running on negative territories indicates a sell signal by crossing its trigger line while RSI is slopping downwards below its equilibrium level. The overview is still negative for the pair since BoJ’s policy meeting did not add value to it at all.
The target on the hourly chart is set down to the support of 100.15. MACD has just crossed its signals and its equilibrium level while ADX indicates negative directional movement. It is also important to mention that the price has downwards crossed SMA50 giving a sell signal. On the other hand, the risks are near the resistance levels of 101.25 and 101.55.
The Loonie is testing the psychological resistance of 1.32 today. The next valid target above 1.32 is around 1.3235 which coincides with SMA200 on the daily timeframe. RSI is slopping upwards on bullish territories and Stochastic is moving upwards as well.
Shifting at the hourly chart, we can clearly see the next valid target to the upside at 1.3235 and the support level of 1.315. RSI is close to its overbought level but it starter slopping downwards. A rise up to 1.3235 is possible and then the pair may decline down to the levels of 1.30. A cross of the support of 1.315 would be supportive to this hypothesis.
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