Not very much is expected from the economic calendar ahead, with exception to the latest consumer inflation data from Canada. Will it give forex traders another opportunity to play the range in CAD/JPY?
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Fresh Market Headlines & Economic Data:
- White House official denies administration is looking at a payroll tax cut
- Donald Tusk rejects Boris Johnson request to remove backstop
- U.K. manufacturing output stabilised in August, following a drop in July – CBI Industrial Trends Survey
- Italian PM resigns with attack on ‘opportunist’ Salvini
- German PPI increased by 0.1% m/m
- RBA Meeting Minutes: Open to further easing, risks tilted to downside near term
- Swiss foreign trade slipped into the downside in July 2019
Upcoming Potential Catalysts on the Forex Calendar:
- Fed Quarles speaks in Salt Lake City at 11:00 pm GMT
- Australia Westpac-MI Leading Index at 1:30 pm GMT (Aug. 21)
- U.K. Public sector net borrowing at 9:30 am GMT (Aug. 21)
- Canadian CPI at 1:30 pm GMT (Aug. 21)
What to Watch: CAD/JPY
The next 24 hours is looking to be a snoozer in the FX markets, but we might get some action from the upcoming Canadian consumer inflation update. This is a very important input to central bank monetary policy decisions, so if there is a big surprise, then the Canadian dollar could draw in a lot of attention.
If volatility does pick up for the Loonie, a pair to check out is CAD/JPY. It’s currently trading in the middle of a recently developed range between 79.25 to 81.00, so there isn’t an imminent setup at the moment. But if tomorrow’s data does push the pair higher, this opens up an opportunity to play the longer-term downtrend at a strong area of interest/resistance between 80.50 – 81.00. And vice versa, if the market pushes lower to the bottom of the range around 79.25, look for bullish reversal candles before considering a long position.
The average daily true range is around 80 pips, so the potential return-on-risk if targeting the other side of the range is very attractive for a short-term play if using the ATR as a guide to setting your stops.