We expect movement today in the FX market and my main focus will be on the USDCAD. At the CAD court we have a BoC monetary policy rate announcement later in the NY session following two quick rate hikes in the previous sessions. It looks likely that BoC might put a brake on further rate hikes. Economic data show that unemployment rate is steady but retail sales and CPI remained subdued and it is practical to say that further hikes will put more pressure on an economy that is just recovering from a housing bubble. All in all, if Governor Poloz remains confident of the economy and mentioned a clear predetermined path for the Loonie, the USDCAD will dip. On the flip side, if Wilkins and Poloz want the BoC to proceed with caution, the USD will surge. Political events continue to mire the USD. News that the Tax Reforms bill might not pass by November 2017 because the GOP senators are short of numbers to warrant a simple majority might necessitate Trump to rally his senators to support the bill rather than insult them. These tax reforms and the intended corporate tax slash will help in the long term to buoy the already high stock market. On the other hand, news is GOP senators are favoring Taylor over Powell. Taylor is a known hawk and if that is the case, the USD should benefit.
In the monthly chart, there is an evening star three bar reversal and a buy signal turning from the oversold territory. Guided by this, we shall only enter long positions in the daily or weekly chart with fine tuned entries in the 4hr charts. If price fail to close and maintain its position above 1.27, then I will wait till a stochastic buy signal is printed in the 4HR chart.
I will trade as follows:
Buy Stop: 1.2730
Stop Loss: below 1.2630
Take Profit: Target 300 pips minimum