Canada’s Dollar in Triangle
International woman’s day is right around the corner and we have special gift for all the women out there on March 8th, so stay tuned for them! Other than that, we have a big week ahead with central bank rate announcements that could shake up the forex dance floor a bit. From New York City, my name is Kiana Danial with Invest Diva, and this is your forex trading analysis for the week as a bunch of currency pairs dance the week away on the forex dance floor.
USD/CAD Looking Forward to Wednesday
USD/CAD continues its consolidation inside a triangle while remaining above the Ichimoku cloud. With Canada’s GDP on Tuesday and central bank statement on Wednesday, we could finally expect a confirmation above or below the triangle pattern on the daily dance floor, which could indicate the fate of the pair in a long run.
Comparing to other major central banks, Bank of England is one of the more optimistic ones out there and their upcoming policy statement on Thursday might reaffirm their hawkish tone, which in turn could help Mr. British Pound get back up towards the 23% Fibonacci level at 1.55. Right now though the pair is retracing from this key level and moving inside the Ichimoku cloud, and we have set bearish target at 1.52, but in case of a break above our pivot level, our outlook will change back to bullish with 1.5820 as first alternative target.
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A quiet day in the European session yesterday, despite UK manufacturing numbers posting seven month highs. The news confirms a strong start to 2015 for UK PLC, something the Tories will be keen to emphasize as we get into the election countdown, but the growth story is a double edged sword.
The data shows that though manufacturing is up, it is typically manufacturing of finished consumer goods that is up and not that of plant, machinery and commercial equipment. We'd rather see the latter, as the consumer has been the driving force in the recovery since day one and, with lack of diversity, could cause us problems further down the line.
Over in the US stock markets were a different story, with the Dow Jones and S&P both closing in record highs and the NASDAQ breaking above 5,000 for the first time since March 2000. The NASDAQ had the most to lose following the tech bubble burst and it's hardly surprising that it has taken this long. Interestingly though, there are a number of privately held tech stocks with very large valuations (Uber, Air BnB, Pinterest etc.) that at some point will have to float to realise some value for investors, if a couple of these float this year, it could be a bumper year for the NASDAQ.
In Europe we've heard talk of Greece negotiating a third bailout. According to the Spanish finance minister the package would be worth between €30-€50bn. This has been disputed by other finance ministers and central bankers though, which is a little confusing. Greece managed to avoid defaulting last week thanks to them taking on their debt extension, but they have serious liquidity problems, which could either be solved by being allowed back into short term capital markets, which the ECB don't want to see, or by enacting some reforms and getting some funding from its German paymasters.
Overnight during the Asian session the Reserve Bank of Australia decided not to cut rates, but did signal another cut was on the cards soon. The market had been expecting further action and without it the Aussie Dollar rallied in the Asian session. The housing market is the likely cause of the Bank deciding not to act, as cutting rates will further fuel an already overheating market.