After keeping the bench mark interest rate constant, the move by the BoC was interpreted as dovish and the CAD tanked. From the statement, it appeared as if rates will remain suppressed for an extended period of time. The BoC played down expectations by citing trade and geographic uncertainty mainly because of the ongoing NAFTA negotiation and of course the suppressed labor market.
Until positive steps are seen, then the BoC might consider raising rates. In the meantime, Australia’s Trade Balance fell after data show that figures missed expectations to record 0.4B against 1.4B hinting at a possibility that Chinese demand may be slowing down. This does not bode well with this commodity dependent currency.
To the charts and I will look to buy the GBP. Technically, there is a strong buy signal in the 4HR chart coming at a back of strong bull pressure last week and a general bullish trend set by higher time frame charts.
Now that this reversal and bull pressure is happening at key Fibonacci reversal level, we shall fine tune our entry in the 1hr chart and look to enter long at the close of this 4HR candlestick preferably at today’s highs of ¥151.20 which is above 23.6% Fibonacci retracement level. This means we shall set a buy stop and trade as follows:
Buy stop: ¥151.20
Stop Loss: ¥150.20
Take Profit: ¥153-This week’s highs.