Fiscal stimulus talks energized Asian session bulls today and pushed higher-yielding bets higher against the safe-haven dollar.
Will the risk-on trading environment extend to London session trading?
Before we talk about how EUR/CAD may present good trading opportunities, check out the top market headlines in the last couple of hours:
- Bank of Canada not actively discussing but doesn’t rule out negative rates
- Fed’s Kaplan rejects adding to bond buys, nods to future taper
- Fed’s George: Framework ‘less’ a promise to engineer inflation than ‘tolerance’ of it
- With no expectation of fiscal stimulus soon, Fed’s Rosengren sees recovery hampered
- Pelosi, Mnuchin search for common ground as U.S. COVID-19 talks resume
- Japan’s household spending, real wages extend COVID-driven declines
- Australia central bank warns of business failures as property vacancies rise
- RBA: Australian banks strong enough to withstand economic shock, support recovery
- China’s services sector recovery gathers pace in Sept – Caixin PMI
- Asian shares close in on two and half-year peak as U.S. stimulus hopes return
- Dollar slips and yuan soars as investors eye Biden presidency
Upcoming Potential Catalysts on the Economic Calendar:
- U.K.’s construction output at 6:00 am GMT
- U.K.’s monthly GDP at 6:00 am GMT
- U.K.’s industrial production at 6:00 am GMT
- U.K.’s manufacturing production at 6:00 am GMT
- France’s industrial production at 6:45 am GMT
- Italy’s industrial production at 8:00 am GMT
- Canada’s labor market data at 12:30 pm GMT
What to Watch: EUR/CAD
Higher oil prices and second wave concerns in the eurozone dragged EUR/CAD lower yesterday, enough to break a key support level.
But that was yesterday. The pair has since found support at the 1.5500 zone and has been poppin’ up dojis on the 4-hour chart. Heck, even Stochastic is hinting at the euro’s oversold conditions!Was EUR/CAD’s breakdown (downside breakout) just a fakeout? There are no top-tier reports scheduled from the eurozone but Canada is printing its labor market data today.
If Canada’s jobs numbers come in better than markets had expected, then traders may pile on to EUR/CAD’s losses and drag the pair to new October highs.
A downside surprise, on the other hand, or speculations of more stimulus from the ECB, could push EUR/CAD back above the 1.5550 previous support level and encourage a trip to the 1.5600 previous area of interest.