Poloz: Too early to tell impact of oil. Seems content to wait and see
Bank of Canada Poloz was doing a bunch of chatting today and he seemed to want to wait and see but also said that the data and oil would be factors in April rate decision. Was he suggesting another cut was possible? The USDCAD rallied on the comments. The Bank of Canada last cut rates in a surprise move back on January 21. Will they act again in April? Retail Sales in December and January were poor. Manufacturing sales were weak in January. GDP will be weak in Q1. Oil prices are off the lows but only back to the end of February levels. Harsh weather in Canada should keep data on the soft side (or one would think).
Between now and the rate decision on April 15, there is GDP for January MoM and YoY and Trade data for February due out next week. Ivey PMI (can be quite volatile), Housing starts/building permit, and employment will be released the following week (April 3-10th). Retail Sales/CPI will not be released until after the April 15 decision. One other thing Poloz said was that "he prefers not to surprise markets". With one surprise under his belt in 2015, I would expect to hear from him again before the next rate decision.
From a technical perspective, the USDCAD fell below trend line support in pre-speech trading (see 4-hour chart above). On Tuesday, the price dipped below the level briefly, but quickly rebounded. Today, more time was spent below the trend line level, but the price is back above at the the 1.2447 level. The rally through the Poloz speech and Q&A session found sellers against the topside trend line on the 4- hour chart at the 1.2494 (the high for the day came in at 1.24942). Off that chart 1.2447 support and 1.2494 resistance.
Drilling down, I wish there were something more off the 5 minute chart, but the price is currently trading near the 200 bar MA and the 50% of the day's trading range (see green line in the chart below). The 100 bar MA (blue line in the chart below) is trading at the 1.2443 level - and starting to move higher. This is close to the trend line support off the 4-hour chart. If the market traders are to hedge against a possible rate cut, this area should find support buyers on dips (risk defining level). Just an idea for a low risk trade.
It still is a long way from the decision (and US data as well to contend with), but is the rally after breaking support, a reason to look to buy on dips? Watching for support to hold and go from there.
So,