USD/CAD hits the top of today’s watchlist as volatility hits the Loonie after the latest monetary policy statement from the Bank of Canada, and later will see important updates from the U.S. jobs sector to keep Dollar traders busy into the next session.
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 12009.20 +0.83% FTSE: 7299.51 +0.43% S&P 500: 2924.24 +0.62% DJIA: 26277.30 +0.61% |
US 10-yr 1.474% +0.008 Bund 10-YR -0.662% +0.053 UK 10-YR: 0.503% +0.097 JPN 10-YR: -0.234% +0.007 |
Oil: 55.78 +3.41% Gold: 1552.50 +1.51% Bitcoin: 10403.46 -1.96% Etherium: 175.52 -2.16% |
Fresh Market Headlines & Economic Data:
- Bank of Canada maintains overnight rate target at 1.75%
- Stocks rise as Hong Kong tensions ease, China signals stimulus
- U.S. trade deficit shrinks, but shortfall with China widens
- NY Fed President John Williams says low inflation is ‘the problem of this era’
- New York Current Business Conditions recovered from the 3+ year low of 43.5 reported in July to reach a 4 month high of 50.3 in August
- The seasonally adjusted Chinese Services Business Activity Index posted 52.1, up from 51.6 in July
- U.K. service sector growth slows in August
- Boris Johnson demands election after Brexit defeat
Upcoming Potential Catalysts on the Forex Calendar:
- Federal Reserve Beige Book at 7:00 pm GMT
- Australia Trade balance at 2:30 am GMT (Sept. 5)
- Switzerland GDP q/q at 6:45 am GMT (Sept. 5)
- U.S. Challenger Job cuts at 12:30 pm GMT (Sept. 5)
- U.S. ADP Non-Farm employment change at 1:15 pm GMT (Sept. 5)
What to Watch: USD/CAD
The action has picked up on USD/CAD in today’s session and it looks like a very positive move for the bears thanks to a combination of positive risk sentiment (Hong Kong tensions ease, China stimulus) and the Bank of Canada holding interest rates at 1.75% just over an hour ago. Dollar weakness is also likely a factor as yesterday’s weak manufacturing data may be playing a role as well.
Looking forward, we could see more USD volatility with the upcoming Fed Beige book report and Thursday’s U.S. employment data, and if they disappoint, that could mean further opportunities lie ahead in the short-term for USD/CAD traders.
For the bulls, it’s tough argument right now with USD weakness prevailing, so it’s likely we need to see a very strong update from both Beige Book and U.S. employment to break the selling momentum. If that’s the case and the market has yet to break the rising ‘lows’ pattern on USD/CAD, taking a short-term long position may make sense as there is plenty of upside room for profit with the recent swing highs (around 1.3375) more than one daily ATR away from current levels. A shift in global sentiment to aversion would also be helpful for this type of trade.
For the bears, the ball is currently in your court, but as mentioned above, the market is running into a rising ‘lows’ pattern that could draw in minor support. If the U.S. data disappoints and that pattern is broken, that’s the cue to start putting a short play together for what could be a very strong run lower if the bears hop in for a momentum play and if Friday’s North American employment updates play nice (i.e., weak U.S. jobs update vs. strong Canadian jobs update). The next major swing low is around 1.3050, more than three daily ATR away for a potentially strong return-on-risk.