USD/CAD is testing a major resistance zone!
Will the pair be the next to record a notable technical breakout this week?
Before moving on, ICYMI, yesterday’s watchlist looked at GBP/CAD’s descending channel resistance ahead of BOC’s policy announcement. Be sure to check out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. inflation accelerates from 8.6% to 9.1% in June, the highest since November 1981
Wall Street tumbles, EUR/USD dips below parity after a hot U.S. inflation report
BOC surprises markets with 100bps interest rate hike (vs. 75bps expected) to “avoid the need for even higher interest rates down the road”
U.S. Beige Book reports “growing” signs of slowdown and “increased risk” of recession
U.S. crude stocks unexpectedly rise: EIAEmbattled crypto lender Celsius files for bankruptcy protection
Italy’s government faces collapse as 5-Star shuns confidence vote
AU MI 12-month inflation expectations lower from 6.7% to 6.3% in June
Australia’s unemployment rate falls from 3.9% to 3.5% – the lowest since August 1974
Fed’s Bostic on a 100bps interest rate hike: “everything is in play”
USD/JPY is trading above 138.00 for the first time since September 1998
European shares fall, Italian stocks slide on political worries
Upcoming Potential Catalysts on the Forex Economic Calendar:
EU’s economic forecasts due today
U.S. PPI reports at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
BusinessNZ manufacturing index at 10:30 pm GMT
China’s data dump (GDP, retail sales, fixed asset investment, industrial production, unemployment rate at 2:00 am GMT (Jul 15)
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
What to Watch: GBP/CAD
USD/CAD 4-hour Forex Chart
Resistance alert! USD/CAD is knocking on the 1.3060 zone that has held as resistance at least thrice since mid-May.
What makes the setup more interesting today is that the last 4-hour candlestick looks verrrry bullish and ready and able to take on the resistance level.
Recall that Bank of Canada (BOC) just surprised markets with a 100bps interest rate hike instead of the 75bps hike that traders had priced in.Unfortunately for CAD bulls, forex playas had their eyes on the Fed. Specifically, they’re re-pricing the odds of the Fed raising its rates by 100bps later this month after Uncle Sam’s CPI clocked in at a whopping 9.1% in June.
Are we looking at an upside breakout in the making? The U.S. will be printing its PPI numbers later today and, while it won’t have as much impact as the CPI release, it could also feed the markets’ inflation concerns and inspire more 100bps rate hike speculations.
If the dollar domination extends to today’s U.S. session trading, then USD/CAD can finally break above 1.3060 and retest previous areas of interest like 1.3100 or 1.3340.
Of course, traders can also take a chill pill and maybe even take profits ahead of the weekend.
I’ll be looking at China’s data dump scheduled during the Asian session for clues on the pace of global economic growth and overall risk-taking.
