Waiting for the news from The Central Bank of Russia

No surprises from Yellen or Carney. As anticipated, the Fed’s rate is 1.25% p.a.; the BoE's rate remains unchanged at 0.25%.
Unemployment in Australia turned out to be better than expected yesterday. 5.5% against the forecast of 5.7%., so the macroeconomic climate continues to improve. On the good fundamental news the Australian dollar rose about 150 points against the US dollar. Then the aussie fell, and the pair again tested 0.7570.
The unemployment number was good not only in Australia, but also in the United States. The number of initial jobless claims fell to 237,000. This was bad for the EUR/USD pair. The pair continued its march into the red zone, breaking through the 9 EMA on the daily charts.
Unfortunately, we don’t know what Mr. Carney will say, but the chart will quite likely react to any possible subtleties in his remarks. Technically, a second inverted bearish flag is forming on the daily charts, which just might lead to a further decline. We are concerned about the 1.2700 mark, since this is where one of the Fibonacci levels is located.
Among tomorrow’s news, we’ll be watching the Bank of Russia's rate. Forecasts vary. We won’t rule out that Elvira Nabiullina will lower the interest rate by 50 basis points, i.e., to 8.75%, but some think that the Central Bank will stick to a more cautious policy, bearing in mind the proximity of the 4% inflation target. Along with the interest rate, traders will be watching Russia’s GDP. It is expected to rise by 0.3%.
Besides Russia, the Bank of Japan will be making a decision on the interest rate. There should be no surprises here. A cheap money policy remains in force. The rate will remain negative at -0.1%.
At 12:30 pm GMT data on new construction permits will be published in the United States.
Stocks
No significant corporate news is expected on Friday.
Yesterday traders on the Russian stock exchange were probably watching the press conference by Vladimir Putin and the statistics on the Central Bank’s currency reserves. Unfortunately, neither rescued the Russian stock exchange. The situation was lamentable throughout the day. During the day, the basic stock exchange index, the MICEX, fell below 1800 points, testing the 1774.56 mark. We believe that there might be a technical rebound tomorrow, related both to macroeconomic news and to a possible technical closure of short positions.
As for the US stock market, by contrast, everything looks positive. The bulls are still taking profit. The DJIA is close to the 21,400 boundary.
Currency Market
The GBP/CAD pair, like the price on the daily charts, is forming an inverted bearish flag, which might lead to a further fall in the pound sterling. Conservative traders should wait for confirmation in the form of a breakthrough of the channel’s lower boundary – 1.6780, which is a 50% Fibo correction. The 9-day EMA is headed downward, which for now precludes the possibility of longs, but in no way rules out a technical rebound that might end at 1.7030 (a 38.2% Fibo). According to Elliott’s wave theory, a trend impulse just might be forming on the weekly mid-term charts and, if this is the case, we must as a minimum get confirmation in the form of a successful attack on 1.7030. So, nothing super-original – two scenarios – we trade down if there is a breakthrough at 1.6780 (confirmation of the flag, possible reconsideration of the wave analysis scenario) or we trade up if there is a breakthrough of the upper boundary at 1.7030 and confirmation of the formation of a third impulse wave, which just might be extended.
The attempts by the AUD/CHF pair to break through 0.7400 that we wrote about yesterday looked promising. But “to promise is not to marry,” and there was no breakthrough on the mid-term weekly charts. There might be one more attempt at an attack in the next few trading sessions. Along with the Fibonacci level, the aussie is trying to break through the 9-EMA, too. It is clear that the bulls are really trying, but at the same time the bears have a chance to retake positions by using short stops. It’s clearly worth watching the situation and being ready to join the winners.

Nikolay Dudchenko, Olymp Trade analyst

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