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With both the U.S. and Canada printing labor market numbers today on the economic calendar, I’ve got my eyes on a potential triangle trade on USD/CAD.

Currency Snapshot:

Major Forex Pairs Price Performance
Major Forex Pairs Price Performance

Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Economic Calendar:

  • OPEC meetings ongoing
  • Germany’s factory orders at 7:00 am GMT
  • France’s trade balance at 7:45 am GMT
  • U.K.’s Halifax house price index at 8:30 am GMT
  • U.S. NFP report at 1:30 pm GMT. Read our preview if you’re trading the event!
  • Canada’s labor market numbers at 1:30 pm GMT

What to Watch: USD/CAD

USD/CAD 1-hour Forex Chart
USD/CAD 1-hour Forex Chart

The Fed’s 50 basis-point interest rate cut and rising coronavirus cases in the U.S. took the shine off the dollar for most of the week.

The Loonie isn’t faring much better after the Bank of Canada (BOC) also cut its rates by 50 basis points and word got around that OPEC and its friends aren’t ready to commit to the production cuts needed to boost oil prices amidst lower global oil demand.

This is likely why USD/CAD is locked in what looks like a descending triangle after breaking above the 1.3325 major resistance level.

Things will get interesting in the next couple of hours when both the U.S. and Canada print their February labor market numbers.

Markets expect the U.S. NFP report to simulate January’s good jobs conditions before COVID-19 really took a chunk off of hiring and services activities.

Ditto for Canada, which is expected to print an additional 10,000 jobs in February even as its unemployment rate is expected to tick back up to 5.6%.

Things is, the Fed has another meeting scheduled later this month and, word around is that Powell and his team just might cut their rates further.

If the U.S. NFP numbers print much lower than markets are expecting, then we could see USD/CAD edge closer to the 1.3325 triangle support that’s within USD/CAD’s daily ATR.

Meanwhile, a strong NFP report or a weaker-than-expected Canadian release could push USD/CAD above the triangle and aim for the previous highs near 1.3450.