A bit of risk-on action seems to be returning to the markets as traders react to the OPEC production cut and more stimulus efforts.
With no major catalysts lined up for the London session, I’m counting on an extension of these risk rallies.
But first, here’s a quick look at how the major forex pairs are doing.
Fresh Market Headlines & Economic Data:
- Sources: U.S. gov’t looking into $15.5B worth of first phase farm aid
- NY Governor says ‘worst is over’ as coronavirus death toll slows
- New York and California states look into state reopening plans
- Number of potential coronavirus vaccines being developed now at 70
- IMF to provide debt relief to 25 countries hit by coronavirus pandemic
- South Korea to revisit budget plan for more measures to support jobs, companies
- New Zealand eyes further fiscal support to limit job losses
- Australia’s NAB business confidence index sank from -2 to -66
- Chinese exports down 3.5% y/y, trade surplus at $19.9B from earlier $4.3B deficit
- Asian shares edge higher on Chinese data, dollar weakness
Upcoming Potential Catalysts on the Economic Calendar:
- G7 Meetings ongoing
- U.S. import prices data coming up
What to Watch: EUR/CAD
Market watchers seem to be in a slightly better mood lately as the spotlight has been on improving coronavirus-related updates and increasing aid efforts.A number of U.S. states are already looking into their plans to reopen while the IMF has pledged debt relief for several countries hit by the pandemic. Meanwhile, New Zealand and South Korea continue to explore more fiscal measures to limit the fallout in their domestic economies.
With that, riskier currencies like the Loonie could outpace lower-yielding ones like the euro, especially with the OPEC recently agreeing on a production cut.
EUR/CAD recently broke below its short-term range and might be in for a quick pullback. Moving averages confirm that the trend is still looking bearish for this pair.
The pair is already in the middle of a correction and might retreat to the 50% level that lines up with the broken short-term support. If it holds as a ceiling, the pair could slip back to the swing low or lower.
Just make sure you check the average EUR/CAD volatility when setting stops and targets if you’re trading this one!