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!
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.