Risk appetite seems to be extending its stay in the markets, and it looks like the optimism continues to boost crude oil. Can this mean more gains for the correlated Loonie?
Fresh Market Headlines & Economic Data:
- Chinese economy expanded by 6.0% q/y in Q4 2019 as expected
- China’s fixed asset investment up from 5.2% to 5.4% ytd/y vs. 5.2% forecast
- Real estate investment in China up by 9.9% in 2019
- Chinese industrial production jumped from 6.2% to 6.9% y/y vs. 5.9% consensus
- Chinese retail sales steady at 8.0% y/y vs. projected dip to 7.9%
- Chinese unemployment rate ticked up from 5.1% to 5.2%
- 11 U.S. troops reportedly injured in Jan. 8 Iranian missile attack
- New Zealand Business NZ manufacturing index down from 51.2 to 49.3
Upcoming Potential Catalysts on the Forex Calendar:
- Swiss PPI at 8:30 am GMT
- U.K. retail sales at 10:30 am GMT
- Euro zone final CPI readings at 11:00 am GMT
What to Watch: EUR/CAD
Crude oil has been on a tear these days as market watchers are hopeful that the tariffs on this commodity could be lifted sooner or later. This optimism could keep the correlated Loonie supported and allow the EUR/CAD downtrend to pick up.
The pair has been cruising below a descending trend line visible on longer-term time frames but has formed higher lows above a short-term rising trend line recently. Price is testing this support zone, and a break below it could confirm that the selloff could carry on.
A short entry at 1.4500 could be enough to catch a short-term breakdown until the swing low near 1.4450 or lower. The pair moves an average of 53.5 pips per day, so a stop loss of around the same size could offer a decent R:R for a quick trade.