Global macro overview for 26/10/2017:
The Bank of Canada decided to maintain the overnight rate at 1.0%, which was widely expected by the surveyed market participants. Investors are reminded of a more cautious approach to future rate hikes and that economic growth in Canada will probably be lower next year than it was this year. BoC policymakers should also monitor the strength of the Canadian currency, which weighs on the pressure of inflationary processes and on the volume of exports. To make its case, the bank also pointed to the substantial, persistent unknowns around geopolitical developments as well as US related fiscal and trade policies, such as the renegotiation of the North American Free Trade Agreement.
Governor Stephen Poloz has introduced two rate hikes since July — at consecutive policy meetings — in response to the economy's impressive run over the last four quarters. The increases removed the two rate cuts introduced in 2015 as insurance following the collapse in oil prices.
Let's now take a look at the USD/CAD technical picture at the H4 time frame. After the news, the price of USD/CAD has managed to broke out above the technical resistance at the level of 1.2777 and now is consolidating gains around this level. The next technical resistance is seen at the level of 1.2858 and the nearest support is now the level of 1.2777. Please notice the overbought market conditions that might result in temporary correction.
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