Looking to steer clear of the Greenback during the NFP release? Here’s a non-dollar pair you might wanna trade instead!
Canada has its own employment numbers due, and the Loonie might be a less jumpy option to trade.
But first, here’s a quick look at how the majors are doing:
Fresh Market Headlines & Economic Data:
- Fed official warns of second recession next year if economy is too quick to reopen
- U.K. GfK consumer confidence index up from -34 to -33 vs. -37 forecast
- Japanese average cash earnings tick up by 0.1% as expected
- Japanese household spending slipped by 6.0% y/y vs. projected 6.3% drop
- RBA: Economy to contract 6% this year, but gradual recovery expected in second half of 2020
- RBA: Bank prepared to scale up asset purchases again if needed
- Japanese gov’t considering more stimulus options such as business rent relief
- Japanese economy minister Nishimura: Lifting of state of emergency may be in sight
- Trade representatives from U.S. and China had a conference call
Upcoming Potential Catalysts on the Economic Calendar:
- German trade balance at 7:00 am GMT
- ECB head Lagarde’s speech coming up
What to Watch: CAD/JPY
Traders seemed to be in a risk-on mood for the most part of the Asian session as representatives from the U.S. and China reportedly had a friendly conference call.However, this could change soon as the focus shifts to the upcoming jobs reports from the U.S. and Canada. Now, market watchers are already bracing themselves for extra volatile USD moves, so looking at non-dollar pairs might be a safer bet.
The Loonie could have a few bearish moves up its sleeve as Canada’s jobs report might show a dismal 4 million increase in unemployment for April. This should be enough to bring the jobless rate to a whopping 18% for the month!
Weaker than expected numbers could allow CAD/JPY to turn lower upon hitting the Fib retracement levels close to the top of its descending channel. If so, the pair could retreat to the swing low or the channel support closer to the 74.50 minor psychological mark.Note that the yen is looking like a good bullish bet at the moment since some Japanese officials recently expressed optimism about lifting the state of emergency soon. More government stimulus could also spur domestic business sentiment and consumer activity.
If you’re looking to hop in a short play at the resistance or when Canadian jobs numbers disappoint, make sure you account for the average CAD/JPY volatility when setting stops and targets!