Central Banks Galore

September 9, 2015

Central Banks Galore:
A busy day/night for central bank meetings with the Bank of Canada tonight, into the Reserve Bank of New Zealand tomorrow morning. Throw in some Australian RBA board members speaking and the general endless commentary around the Federal Reserve and there is plenty to keep up with!

We took a look at the RBNZ Interest Rate Decision yesterday, expecting a cut to be all but priced in and the possible trading opportunity of buying into the expected cut.

NZD/USD 4 Hourly:
Click on chart to see a larger view.

Even with fairly ugly Chinese Trade Balance numbers hitting markets yesterday afternoon, the Kiwi has kept focus on the bigger picture and started the week rallying off lows. An alternate explanation is that these Chinese numbers have all but assured a fresh round of stimulus, sure to give the commodity currencies that extra kick. Put this all together and it was certainly a nice entry if you got on board early!

Take a look at the USD/CAD technicals in the Chart of the Day section below.

Dangers of the Dead Cat Bounce:
With the US market returning from the 3 day, Labor Day long weekend holiday, stocks made broad gains with the S&P 500 gaining more than 2% and continuing the march back towards a re-test of the broken major weekly trend line.

SP500 4 Hourly:
Click on chart to see a larger view.

The most interesting piece I came across this morning was this BloombergView piece from Barry Ritholtz titled Don’t Trust the Market’s Big Up Days.

“22 of the 25 biggest S&P 500 up days since 1970 occurred within overall downtrends.”

Dead cat bounces are always intriguing to analyse from a human psych point of view.

Just a word of warning for those that love to ‘buy the dip’.


On the Calendar Wednesday:
AUD Westpac Consumer Sentiment
AUD Home Loans m/m
AUD RBA Deputy Gov Lowe Speaks

GBP Manufacturing Production m/m
GBP Trade Balance
AUD RBA Assist Gov Debelle Speaks

CAD Building Permits m/m
CAD BOC Rate Statement
CAD Overnight Rate

USD JOLTS Job Openings


Chart of the Day:
With the Bank of Canada interest rate decision tonight, lets take a look at USD/CAD from a technical perspective.

USD/CAD Daily:
Click on chart to see a larger view.

The daily chart is a perfect illustration of why picking tops because a chart looks overbought is dangerous. In this last 1200 pip up leg, you could have put forward a case that the chart was running out of steam day after day.

USD/CAD 4 Hourly:
Click on chart to see a larger view.

Is tonight’s rate decision the catalyst to try to finally do some technical damage?

Do you see Forex trading opportunity heading into the Bank of Canada rate decision tonight? Mention @VantageFX on Twitter, leave a comment on our Facebook Page or simply reply below.

Dane Williams – @VantageFX

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