Draghi departure & fate of euro, CB of Canada & Japan decision

25 kwi 2019

The main event on the foreign exchange market yesterday was the announcement of the outcome of the Bank of Canada meeting. For the fourth time, the Central Bank did not raise the rate. The decision is predictable and has been accounted for in the Canadian dollar price. But what was not considered? The fact that the Bank of Canada completely removed the mention of the possibility of a rate hike in the future from its statement. This was a surprise. For the Canadian dollar surprises with a “minus sign”. So, its sales could be called logical.

The rest of the Wednesday was a rather quiet day. Dollar growth has stalled. In the absence of additional drivers for growth. However, today a surge of volatility in dollar pairs might occur after the publication of data on orders for durable goods in the United States. Well, almost certainly not avoid a “roller coaster” on Friday, when data on US GDP for the first quarter will be published.

In relation to relatively calm news background, investors and traders decided to attend to promising events. In particular, what will happen with the euro after the Mario Draghi departure from the post of President of the ECB? According to analysts at UBS, the euro is waiting for its growth regardless of who takes the chair. Motivation - a new president - is a reason to start tightening monetary policy in the Eurozone. That is a positive factor for the euro anyway. So those who are engaged in long-term trading should pay attention to buying euros, which is quite cheap lately.

Another important Central Bank’s meeting this time in Japan was held today. Traditionally, the Bank of Japan did not adjust the country's monetary policy. But at the same time, Central Bank made it clear that the ultra-soft monetary policy will continue until at least 2020. In addition, the Central Bank lowered its forecasts for inflation and GDP in Japan. In general, this is quite a sickening blow to the yen, so its sales remain relevant. So, we are continuing to recommend to buy USDJPY.

According to the US Department of Energy, oil reserves in the United States have risen sharply over the past week (+5.479 million with a forecast of +1.0 million). Despite this clearly bearish signal, oil did not decline. This once again confirms the current situation in the oil market: buyers dominate. This means that it is necessary to continue to look for points for buying on the intraday basis.

As for our other positions, today we are continuing to look for points for selling the dollar against the euro, pound, and also the franc. In addition, we return to the gold buying on the intraday basis.