USD/CAD quasi-channel pattern on the one hour timeframe makes it to our final daily watchlist post of the week thanks to top tier data ahead from both Canada and the U.S.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12263.02 -0.63% FTSE: 7503.30 -0.43% S&P 500: 2983.06 -0.05% DJIA: 27193.15 -0.10% |
US 10-yr 2.064% +0.003 Bund 10-YR -0.309% -0.019 UK 10-YR: 0.756% -0.003 JPN 10-YR: -0.135% -0.012 |
Oil: 60.66 +0.38% Gold: 1415.60 +0.22% Bitcoin: 9304.29 -4.09% Etherium: 207.66 -1.80% |
Fresh Market Headlines & Economic data:
- Philadelphia Fed manufacturing gauge rebounds sharply in July to highest level in a year
- U.S. labor market still strong; mid-Atlantic factory activity rebounds
- Mnuchin says U.S., Chinese call could lead to in-person talks
- ADP Canada National Employment Report: Employment in Canada Increased by 30,400 Jobs in June 2019
- UK retail sales jump unexpectedly in June boosting sterling
- MPs vote to block Boris Johnson from forcing through a no-deal Brexit
- Pound Gains as Barnier Comments on Brexit Border Spur Optimism
- Varadkar: NI only backstop could avoid hard border
- The Swiss trade surplus widened sharply to CHF 3.3B in June 2019 from a downwardly revised CHF 1.5B in the previous month
- Australia jobless rate stuck at 5.2%, signals more work for RBA
- NAB business confidence survey: Australian conditions ease further, while confidence increases
- Sliding Japan exports, manufacturing gloom heighten economic risks
- Japan manufacturers’ mood hits three-year low: Reuters Tankan
- BOJ’s Kuroda says will mull data until last minute in deciding July policy
Upcoming Potential Catalysts on the Forex Calendar:
- Fed’s Williams speaks on monetary policy at 7:15 pm GMT
- Japan National core CPI at 12:30 am GMT (July 19)
- German PPI at 7:00 am GMT (July 19)
- Euro area current account at 9:00 am GMT (July 19)
- UK Public sector net borrowing at 9:30 am GMT (July 19)
- Canada retail sales at 1:30 pm GMT (July 19)
- U.S. University of Michigan consumer sentiment at 3:00 pm GMT (July 19)
- Fed’s Bullard speaks in New york at 4:05 pm GMT (July 19)
- Fed’s Rosengren speaks at 9:30 pm GMT (July 19)
What to Watch: USD/CAD
It’s not a clean setup, but we can see a steady grind lower on USD/CAD, forming a pattern of lower ‘highs’ and ‘lows,’ (i.e., a descending channel). The pair has bounced back higher in the past few sessions to the top of the descending channel, which also happens to be a minor resistance area at a major psychological level (bears take back control twice just under 1.3100 in the past week).
So the question is will the bears take back control again? From a price action standpoint, the setup is attractive to technical traders, especially given that the stochastic is signaling short-term overbought conditions. But we’ve also got to consider that there is top tier economic data ahead, most notably the Canadian retail sales update and the U.S. consumer sentiment update from the University of Michigan.
If you’re a bear, you may want to wait for those data points coming soon, an if we see a better-than-expected Canadian retail sales update and the U.S. consumer sentiment update disappoints, odds are good that this area up to 1.3100 is short-term top, especially if we see catalyst for stronger oil before the end of the week.
If you’re a USD/CAD bull, a disappointing Canadian retail sales update and the positive U.S. consumer sentiment update is likely the trigger for a strong short-term move higher, and if the market does break the falling ‘highs’ pattern, the next step is either a upside break play for the aggressive traders out there, or a break-and-pullback for the more conservative players out there.
In either case, we are fast approaching the weekend, so it’s probably a good idea to exit quickly, and keep in mind that the daily ATR currently clocks in around 60 pips per day. Reaching beyond that is not a likely scenario before the weekend close.