The Bank of Canada is set to release their latest monetary policy statement very soon, making the Loonie the currency to watch for a potential spike in volatility and momentum/breakout plays.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12062.98 -0.07% FTSE: 7293.94 +0.22% S&P 500: 2832.42 +0.23% DJIA: 25670.73 +0.33% |
US 10-yr 2.294% -0.035 Bund 10-YR -0.148% -0.032 UK 10-YR: 0.931% -0.026 JPN 10-YR: -0.074% -0.002 |
Oil: 59.07 +0.75% Gold: 1276.30 -0.57% Bitcoin: 8660.96 -1.88% Etherium: 267.56 -1.91% |
Fresh Market Headlines & Economic data:
- US Home-price gains are weakest in 7 years, and that’s a good thing, Case-Shiller says
- The Conference Board Consumer Confidence Index improved in May to 134.1, up from 129.2 in April
- The US-China trade war could slash economic output across the world
- Trump concludes Tokyo visit as Japanese trade official plays down August deal chances
- UK mortgage approvals hit two-year high following Brexit extension
- GfK Consumer Climate slightly lower at 10.1 compared to the previous read of 10.2
- Annual growth rate of broad monetary aggregate M3 stood at 4.7% in April 2019, after 4.6% in March (revised from 4.5%)
- Switzerland’s GDP rose by 0.6% in the 1st quarter of 2019 versus a revised higher 0.3% in the previous quarter
- Swiss exports fell by 2.3% in April 2019, imports rose slightly seasonally adjusted (+ 0.8%)
- New Zealand Treasury says ‘deliberately hacked’ after budget details leak
- New Zealand Government concedes some of National’s Budget 2019 details correct
- Japan services producer price index y/y rises 0.9% versus 1.1% in March
- Bank of Japan core CPI increases by 0.7% y/y versus a 0.5% read in the previous month
Upcoming Potential Catalysts on the Forex Calendar:
- RBNZ Financial Stability report at 10:00 pm GMT
- RBNZ Governor Orr speaks at 12:00 am GMT (May 29)
- BOJ Governor Kuroda speaks at 4:00 am GMT (May 29)
- French CPI & GDP at 7:45 am GMT (May 29)
- Swiss KOF Economic Barometer at 8:00 am GMT (May 29)
- German unemployment change at 8:55 am GMT (May 29)
- ECB Financial Stability Review at 9:00 am GMT (May 29)
- Bank of Canada monetary policy decision at 3:00 pm GMT (May 29)
What to Watch: CAD/JPY
Probably the biggest economic event of the week for currencies is the latest monetary policy statement from the Bank of Canada on Wednesday, and if you haven’t done your homework yet on what to expect, check out Forex Gump’s guide on the event here. Whatever bias you take away after doing some reading, you can probably best apply it to CAD/JPY as the pair is currently in a consolidation pattern, roughly between 81.00 and 81.50.
For the bulls, if the BOC continues with hints of future rate hikes and or isn’t too worried about global trade due to the U.S.-China trade war, then a break above that minor resistance area around 81.50 should definitely be on the radar for a likely quick momentum trade, or to throw on the watchlist for a break-and-retest type setup.
For the bears, if they’re still concerned with global trade and they remain dovish enough to not consider rate hikes in 2019, then a break lower of the minor support area down to the major psychological area (81.00 -81.00) should definitely hit the watchlist for either a momentum short play or break-and-retest short.
One last thing to consider is that there will be a presser after the statement, which could bring additional volatility and possible shift in sentiment if there are any comments that weren’t in the original monetary policy statement release.
