Broad-based dollar strength (KTM: USDX) across the G10 FX
The sentiment deteriorated overnight; global equity benchmark indices dropped with US 10year yields. At close Europe benchmark indices down between 0.30-0.60%, besides Dow Jones down a percent or 220 points and the S&P down by 0.90%.
Most G10 and EM currencies descended Tuesday as the Dollar strengthened, but TRY outperform by 0.45%. Among EM currencies, ZAR down by 2.00% and the CAD down by 0.50% ahead of tonight’s BOC policy statement.
What’s on today?
ANZ reported the New Zealand Business Outlook this morning. The report says “In the May ANZ Business Outlook Survey headline business confidence lifted 6 points, with a net 32% of respondents reporting that they expect general business conditions to deteriorate in the year ahead”.
Looking at the day ahead, it’s not a busy day in Asia and Europe. However, it is worth to focus on Bank of Canada’s policy statement. It is widely expected that the BOC will hold the interest rates tonight at 1.75%.
Chart of the day: CAD crosses
The combination of a strong dollar and tonight’s BOC meeting USDCAD up by 0.50% and currently trading at 1.3490. We expect the cross may rally further to 1.3560 and 1.3600 intraday, as suggested by its inverse H&S pattern on the four-hour chart and A-B-C wave pattern on the daily chart.
The other CAD crosses (EUR and GBP) developing the same (inverse H&S pattern) pattern.
Regarding AUDCAD, we tweeted a bullish target at 0.9300 and 0.9370. Currently, the cross is trading at 0.9345 in Asia session. We recommend taking profit.
As shown in the above charts, EURCAD and USDCAD are developing an inverse H&S pattern on the H4 chart. Buying the breakout could rally further higher towards 1.5180/1.5200 and 1.3560 and 1.3600 respectively.
It is important to always keep in mind the risks involved in trading with leveraged instruments.
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