Daily U.S. Session Watchlist: USD/CAD

Lots of action going on in the currency markets, and possibly one of the best ways to play it out into the weekend is through USD/CAD. With Canadian employment coming soon, this range-bound pair may break out soon.

Intermarket Snapshot

Fresh Market Headlines & Economic Data:

• US and China make no progress on key trade issues in two days of deputy-level talks
• White House denies report China’s Liu He plans to leave Washington on Thursday: CNBC
• U.S. Weighs Currency Pact With China as Part of Partial Deal
• Trump tweets he will meet with Chinese vice premier on Friday
• US consumer prices were unchanged in September, the weakest reading since January
• Canadian new housing prices were up 0.1% in August, the first increase since July 2018
• Britain and Ireland say there is pathway to Brexit deal
• UK data show economy a bit weaker than expected: Carney
• Recession fears stoked as UK manufacturing plunges
• The total U.K. trade deficit (goods and services) narrowed £13.0B to £4.6B in the three months to August 2019
• Brexit Uncertainty Weighs On UK Housing Market: RICS
• German Imports Suggest Trade-Inflicted Slowdown Is Hitting Home
• French industrial production fell in August
• Italian industrial production up 0.3% in August
• Bond buys, tiered deposit rate generated most opposition at ECB policy meeting
• Australia mortgages point to “mini-boom” in housing but signs bleak elsewhere in economy
• New Zealand food prices were flat overall at 0.0% in September 2019. After seasonal adjustment, they rose 0.3%
• Japan Bank lending +2.0% y/y in September vs. 2.1% in August
• Japan’s soft machinery orders heighten doubts over business spending
• Japan’s producer prices continue to fall

Upcoming Potential Catalysts on the Forex Calendar:

• Fed’s Mester speaks at John Carroll University at 10:30 pm GMT
• New Zealand Manufacturing index at 10:30 pm GMT
• Japan M2 money supply at 12:50 am GMT (Oct. 11)
• German CPI at 7:00 am GMT (Oct. 11)
• ECB’s Guindos speaks in Madrid at 11:30 am GMT (Oct. 11)
• Canadian employment at 1:30 pm GMT (Oct. 11)
• U.S. Import prices at 1:30 pm GMT (Oct. 11)
• U.S. Consumer sentiment at 3:00 pm GMT (Oct. 11)

What to Watch: USD/CAD

USD/CAD 1-Hour Forex Chart

There’s been a lot of choppiness going on with USD/CAD lately, evidenced on the one hour chart above as it seems to be currently stuck in a range between 1.3300 – 1.3350, which was preceded by a lower range between 1.3230 – 1.3275 in September. This behavior is likely on the roller coaster ride that is the U.S.-China trade war story that seems to put out positive/negative developments every few days, or in the case of the last trading session, every few hours.

But we could see a short-term break in this behavior on the upcoming economic event of the session, the latest Canadian employment data. Based on Forex Gump’s Canadian jobs preview, we could get a slow pace of employment growth that may lead to a selloff before the weekend if we see a much weaker-than-expected number. In this scenario, a break back above the broken support level of 1.3300 is likely to draw in buyers for a short-term play for the October highs around 1.3350.

But if the number comes roughly inline or better than expected, today’s breakdown in the pair to retest 1.3275 may have legs to move further down. In this situation, a break-and-retest of 1.3275 will likely draw in short-term momentum players to gun for the next support area around 1.3230, a reachable goal given the daily ATR of around 60 pips on this pair.

Of course, geopolitics is a big factor with this pair given the potential effects of a U.S.-China trade deal on both the U.S. dollar and Canadian dollar, so keep a watch out for news on that front as well given that high-level negotiations are taking place in Washington, D.C. this week as any kind of deal or no-deal could throw market sentiment out of wack from what we’re seeing today. It’s a tough market out there…trade safe!