The OPEC output deal is already in effect, which could mean more upside for crude oil and the correlated Loonie.
Meanwhile, the U.S. dollar is waiting on another top-tier report that would likely remind traders of the economic repercussions of COVID-19.
Before we talk setups and expectations, check out the biggest forex market movers during the Asian session:
Fresh Market Headlines & Economic Data:
- BOC Governor Poloz: Canada faces asymmetric risks, downside ones more dire
- Trump threatens new tariffs on China for not stopping the virus from spreading
- Fed announces it is expanding the scope and eligibility for the Main Street Lending Program
- Several Asian markets closed for the Labor Day holiday
- Crude oil advances as OPEC output cuts kick in
- South Korean exports post worst slump in 11 years
- Australia’s AIG manufacturing index down from 53.7 to 35.8
- Tokyo core CPI down by 0.1% vs. projected 0.1% uptick
- BOJ minutes: Policymakers agreed to enhance easing to limit virus impact on economy
- Japanese final manufacturing PMI downgraded from 43.7 to 41.9
- Australian producer prices up 0.2% after earlier 0.3% gain
Upcoming Potential Catalysts on the Economic Calendar:
- U.K. Nationwide HPI at 7:00 am GMT
- Australian commodity prices at 7:30 am GMT
- U.K. mortgage approvals and net lending to individuals at 9:30 am GMT
What to Watch: USD/CAD
This pair recently fell through its head and shoulders neckline and is in the middle of a correction to this area of interest.Price is already closing in on the 38.2% Fibonacci retracement level that lines up with the 100 SMA dynamic inflection point. This moving average is below the slower-moving 200 SMA to confirm that resistance is more likely to hold than to break.
Buyers could use a break as stochastic reflects overbought conditions, so USD/CAD might follow suit as the oscillator turns south. From there, a drop to the swing low could follow.
A larger correction could last until the 50% to 61.8% Fib levels that are closer to the 1.4000 major psychological resistance.There’s not much in the way of top-tier releases during the London session, although low-tier ones might still be worth keeping tabs on. Traders could look ahead to the U.S. ISM manufacturing PMI due in the next session and price in expectations of another weak read.
On the flip side, the oil-related Loonie could see some upside now that the OPEC output cuts have started to kick in.
Not sure where to place your entry and stop loss levels? This EUR/USD volatility analysis tool can help you out!