The U.S. is printing a bunch of mid-tier data ahead of the Thanksgiving break and, after today’s crude oil data, I’m looking at USD/CAD for potential trade setups.
Fresh Market Headlines & Economic Data:
- Trump Says China Deal in ‘Final Throes’ as Top Officials Speak
- Fed’s Brainard argues for capping interest rate levels during the next downturn
- RBNZ warns house lending risk may be on the rise
- Bank of Japan policymaker Sakurai sets high bar for additional easing
- Construction work done in Australia eased by 0.4% in the September quarter
- New Zealand trade deficit at NZ$1.0 billion in October
- China’s industrial profits post steepest fall in eight months
- Australia central bank seen cutting rates twice, introducing QE in 2020: Westpac
- Oil slips as US stocks rise, but hopes for US-China trade deal stem losses
Upcoming Potential Catalysts on the Forex Calendar:
- Germany’s import prices at 7:00 am GMT
- Switzerland’s economic expectations at 9:00 am GMT
- U.S. core durable goods orders at 1:30 pm GMT
- U.S. preliminary GDP at 1:30 pm GMT
- U.S. Chicago PMI at 2:45 pm GMT
What to Watch: USD/CAD
In a few hours Uncle Sam will print mid-tier reports including the durable goods orders, Chicago PMI, preliminary GDP reading, and the Beige book report.
A quick look at the forex calendar tells me that analysts generally expect the reports to maintain last month’s readings, if not print slightly higher numbers.
Stronger numbers could push the dollar higher against the Loonie, which has weaker prospects after the American Petroleum Institute (API) reported higher crude oil buildup this week than analysts had expected.As you can see, USD/CAD is sitting on the 200 SMA on the 4-hour chart, a level that’s not too far above an ascending channel support that has been limiting the bulls since late October.
If today’s U.S. data releases print to the upside, then we could see USD/CAD pop higher near the channel support. Otherwise, I’ll be on a lookout for a downside breakout instead.
For one thing, shortened trading days in the U.S. could inspire a bit of profit-taking that would send USD lower against CAD. It also doesn’t help that moving averages are already pointing to “bearish” trends on the 1-hour chart.
So, while there’s still room for a bit of upside movement for USD/CAD, I’ll keep in mind that the pair has already seen heavy gains in the past couple of months, and that a bearish reversal is still on the table.