Finotec News Archive - August 28 2007
Bank of Canada sees new risks ahead of rate move
Risks to the Canadian economy have increased as a result of world credit market turmoil, the Bank of Canada said on Monday, adding this would be taken into account at an interest rate review on Sept. 5.
USD/CAD In Depth AnalysisAnthony Boyajian 
28 August 2007
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Risks to the Canadian economy have increased as a result of world credit market turmoil, the Bank of Canada said on Monday, adding this would be taken into account at an interest rate review on Sept. 5.
The central bank said last month when it raised interest rates that some modest further increase might be required, but Deputy Governor Pierre Duguay said on Monday the central bank would be examining new risks in light of the global squeeze.
Economic data had been "roughly in line" with the forecasts the Bank of Canada gave in mid-July and domestic demand remained robust "against the backdrop of strong labor and housing markets", Duguay said in the prepared text of a speech he was
giving in Kingston, Ontario. "But, given recent events in global credit markets, we need to assess the extent to which the risks around our July projection have shifted," Duguay said in a text made available in Ottawa by the central bank.
The following technical analysis gives us a detailed lookout on what is expected to happen to USD/CAD
The Selling point is at 1.0582; based on breaks of standard error channel upper line.
- Fibonacci retracement 23.6% is the take profit at 1.0532
- Previous support will be the stop loss at 1.0642
The Buying point is at 1.0500; based on bouncing on the lower channel line
- Fibonacci retracement 50% is the take profit at 1.0573
- Fibonacci 38.2% is the stop loss at 1.0440
To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the crossing of the two moving averages above the zero line, the shorter term moving average is faster than the long term and is pointing downwards. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI, we can determine that the market it breaks 70% line downwards.
The momentum oscillator is very important to understand the strength of the market and as we see on the graph; it break the downtrend line. The Stochastic oscillator breaks 80% line and moving downwards.
* The following analysis is for information only; Finotec is not responsible for any
decisions or misinterpretations based on the given text.
By Finotec’s professional analyst,
Tony B.
dealingdesk@finotec.com
Finotec Analysis Team
28 August 2007
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