Meeru's Daily Forex Reviews

[B]USD/CAD: Interest rate decision in Canada. Fundamental analysis for 13.07.16[/B]

Following the release of the US labor market data last Friday, including positive NFPR, the USD rose in the pair USD/CAD. It became known that NFPR in June increased by 287.000 against the forecast of 175.000. Unemployment rate rose to 4.9% against the forecast of 4.8% and 4.7% in May, Note, that unemployment rate in the USA has been below the level of 5.0% for a few consecutive months.

At the same time, Canadian data on the labor market was weak. Unemployment rate in Canada fell in June (6.8% against 6.9% in May). However, economists believe that the number of people who are looking for a job has decreased. Reduction of the jobs in Canada in June amounted to 700 against the expectation that the number of jobs will grow by 5000.

Today at 16:00 GMT + 2, The Bank of Canada will adopt interest rates decision. Currently, the rate in Canada is at the level of 0.5%, and, according to market participants, the Bank of Canada is likely to leave it unchanged. The rise in the housing prices in some regions of Canada, as well as record level of the household debt will prevent the Bank of Canada from easing monetary policy, despite the decline in oil prices and other weak macroeconomic indicators of the economy of the country.

However, even if the Bank of Canada will leave interest rate unchanged today, volatility in the Canadian dollar is expected to be high.

However, in general, the pair USD/CAD will be strongly affected by the movement in the USD and changes in oil price, which has been declining lately.

Considering also, that the US Fed continues to tighten monetary policy and US macro-economic data is positive, the pair USD/CAD may go up in the medium term.

Analytical review:

In the past two weeks the price of the Australian dollar has grown by 200 points against the USD. At the moment resistance level for the pair 0.7650;
Yesterday, important Australian statistics was released, which showed that the change in the employment rate in June was 7900, which is lower than the previous level of 19200;
According to the US Bureau of Labor Statistics, producer price index (PPI) June has grown to 0.5% against the previous value of 0.4% and market expectations of 0.3%;
The AUD is a commodity currency. The decline in oil prices puts pressure on the AUD. During the Asian session the price of crude oil WTI fell by over 1%;
“Commitments of Traders” shows the increase in number of short positions by 6074 contracts, up to 29008. 19512 contracts have been opened for the short positions.

GBP/USD: Decline in the Pound can continue.

Since the opening of today’s trading session the pair GBP/USD continued to rise; however, at the opening of the European session the pair started to decline, reaching the level of 1.3340.

On the hourly chart the indicators OsMA and Stochastic give signals to sell. If the decline resumes today, the pair can fall below the level of 1.3230, which is close to ЕМА200 on the hourly chart and ЕМА50 on 4-hour chart; after that the decline will continue.