Trading plan for 05/09/2018

The market sentiment is not doing well, and weaker data from China and fears of trade wars only intensify pessimism. Solid GDP from Australia only served as an opportunity to sell AUD at a better price: AUD jumped after a solid GDP reading from Australia. In the second quarter, the increase was 3.4% (vs. 2.9 % expected), and data for the first quarter improved by 0.1 pp. up to 3.2%. The rest of the main currencies remained in a narrow band of fluctuations. EUR / USD returns at 1.16, USD / JPY is at 111.50.

On Wednesday, the 5th of September, the event calendar is rich in macroeconomic events. During the European session, we will get PMI data for services in European countries, with Great Britain and a collective result for the Eurozone at the forefront. The most important event of the day, however, will be the announcement of the Bank of Canada's decision on interest rates at 02:00 pm GMT and the statement published with it. Moreover, there are two speeches scheduled for today: first is from ECB's Peter Praet and the second from FOMC Member Neel Kashkari.

USD/CAD analysis for 05/09/2018:

Today investors' eyes will be focused on Canada. At 02:00 pm GMT, the Bank of Canada's decision on interest rates will take place. According to market expectations, Poloz and the company will maintain the rate at 1.5%. Since mid-2017, there have been four hikes, so the central bank will probably decide to take a pause again and postpone the decision to hike the rates. After a long period of sluggish growth, the economy is finally doing well enough that it no longer needs unusually low-interest rates - even in the face of trade uncertainty. Governor Stephen Poloz, however, is trying to free Canada from easy money in a way that does not harm the expansion, he wants to first see the effects of each increase.

Let's now take a look at the USD/CAD technical picture at the H4 timeframe before the decision is made. The market has broken through the last swing high at the level of 1.3174 and made a new local high at the level of 1.3207. Currently, the price is testing the support with a local low made at the level of 1.3162. The key support is seen at the level of 1.3113 - 1.3089, which will be a pretty strong support zone to break through again. Please notice the overbought market conditions, which indicate a possible short-term pull-back towards the support before the uptrend resumption.


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