Today’s Spotlight Market
The next meeting of the Bank of Canada is tomorrow, October 19. The BOC is expected to leave rates unchanged at 0.50%. The Bank of Canada will be looking to see if 3rd quarter GDP data will show a sharp improvement from the dismal 2nd quarter where the Canadian economy shrank by 1.6%.
Fundamentals
The Ft. McMurray, Alberta wildfires pummeled the Canadian economy earlier this year. The halt in oil sands production was one reason exports from Canada were down by 16% annualized. GDP growth would have been even worse except for strong domestic demand, in particular housing demand. Canada is taking a unique approach to try to prevent the housing market from getting too overheated. With new rules introduced this week, borrowers will have to undergo a stress test to determine if they can pay their mortgage in the event of higher interest rates or the borrower undergoes a change in their financial situation. These new mortgage rules will give the Bank of Canada some flexibility in when to raise interest rates as they may not have to raise rates just to head off an overheated housing market.
Technical Notes? -? View Today’s Chart
Turning to the three month continuation chart, we see the Canadian Dollar has been range bound lately. A recent bullish breakout attempt has the Loonie breaking above the 50 day simple moving average. The next two resistance points look to be the .7800 level and then the .7850 level. The slope of the 20 day simple moving average has also started to turn upwards after a steep downward trend. 14 day relative strength index is a neutral 51.42.
———————————————————————————————–
optionsXpress, Inc. makes no investment recommendations and does not provide financial, tax or legal advice. Content and tools are provided for educational and informational purposes only. Any stock, options, or futures symbols displayed are for illustrative purposes only and are not intended to portray a recommendation to buy or sell a particular security. Products and services intended for U.S. customers and may not be available or offered in other jurisdictions.