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Canada questioned

Was rate rise appropriate?
July 13, 2017

On Wednesday a very confident Bank of Canada governor Poloz increased the key central bank interest rate to 75 from 50 basis points.  Yesterday the IMF released a report on the country, written before the hike, warning that the business investment remained weak, non-energy exports are under-performing, housing imbalances have increased and trade negotiations with the US are uncertain indeed.  This against a backdrop of record high household borrowing and an economy heavily reliant on the construction industry and property more generally (where many feel it’s a bubble).

France on holiday for Bastille Day today, Mr and Mrs Macron doing their utmost to position themselves as best friends of Mr and Mrs Donald Trump.  Lots of photos of the two men shaking hands and posing with thumbs up.  Dinner at the Jules Verne Michelin starred restaurant atop the Eiffel Tower and today’s guests of honour at the parade down the Champs Elysees.

DAX 30

A nasty little doji candle after Wednesday’s strong rally does not bode well even if momentum did indeed turn bullish.  Keep in mind that Brexit negotiations with Michel Barnier resume on Monday.   

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

FTSE 100

The break above the pivotal 7400 level is not in the least convincing and a close below here today would confirm that it is a false break – even though momentum has turned bullish.

 

SHORT TERM TRADER:   Square but looking to re-sell.

 

POSITION TAKER:  Short at 7325; stop above 7455.  First target 7125.

S&P 500

Lots of hype over in the US yesterday as several indices inch to new record highs.  Careful because this afternoon US June retail sales and inflation data is published.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

BRITISH POUND/US DOLLAR

The pound regaining a little bit of its composure with a potential weekly reversal candle on EURGBP. 

 

SHORT TERM TRADER:  Small long at 1.2940; stop below 1.2800.  Target 1.3050.

 

POSITION TAKER:  Square.

EURO/US DOLLAR

Still consolidating fairly comfortably just under this year’s highest levels but the MACD is no longer bullish.

 

SHORT TERM TRADER:  Square.

 

POSITION TAKER:  Square.

GOLD

A little shooting star yesterday underlines the struggle it’s having in its attempts at breaching first resistance at 1230.

                            

SHORT TERM TRADER:  Small short at 1235; stop above 1230.  Target 1200.

 

POSITION TAKER:   Small short at 1262; stop above 1235.  Target 1200, maybe more.