The Loonie is on the move thanks to the BOC, and with more negative economic updates from the U.S., USD/CAD looks like it has more short-term pips to give.
Before moving on, ICYMI, today’s Daily London Session Watch list looked at an opportunity forming on NZD/JPY on upbeat data from New Zealand, so be sure to check that out to see if there is still a potential play!
Intermarket Snapshot
| Equity Markets | Bond Yields | Commodities & Crypto |
| DAX: 13141.97 +1.18% FTSE: 7170.60 +0.17% S&P 500: 3116.49 +0.75% DJIA: 27684.57 +0.66% |
US 10-yr 1.771% -0.117 Bund 10-YR -0.331% +0.014 UK 10-YR: 0.728% +0.058 JPN 10-YR: -0.03% -0.007 |
Oil: 58.22 +3.73% Gold: 1477.60 -0.46% Bitcoin: 7487.02 +3.76% Etherium: 149.62 +2.66% |
Fresh Market Headlines & Economic Data:
- Bank of Canada holds rates, sees some evidence global economy is stabilizing
- US service sector slows more than expected in November
- Private payrolls growth tumbles in November as jobs market is ‘losing its shine’
- Renewed decline in UK service sector activity from 50.0 in October to 49.3 in November
- Stagnant new work limits Eurozone private sector growth in November
- German business activity growth ticks higher but remains modest
- French services activity growth eases in November
Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:
- Japan Tankan index at 11:00 pm GMT
- Japan Foreign investment at 11:50 pm GMT
- Australia Trade balance & Retail sales at 12:30 am GMT (Nov. 5)
- BoJ Harada speech at 1:30 am GMT (Nov. 5)
What to Watch: USD/CAD
The Bank of Canada held the overnight rate at 1.75% and commented on the stabilization seen in the global economy, lowering the odds of a rate cut coming anytime soon, hence the rally higher in the Loonie. We also got more disappointing U.S. business sentiment data today, most notably the ISM services PMI read coming in at 53.9 in November vs. 54.7 in March. It looks like this is putting the pressure on the Greenback, and with a lack of any major catalysts on the calendar for the rest of the session, there could be momentum here to catch for the next few sessions.
With USD/CAD breaking below a minor support area around 1.3270, the bears are very much in control and could take this pair down to the next potential support area at the previous swing low around 1.3200. But after a strong break lower, it may be a good idea to wait for a bounce higher before jumping in short to improve the potential return-on-risk. For the more aggressive, jumping in a current levels (around 1.3225) won’t give a great potential return-on-risk, but odds are better of catching some pips and not missing the move.
If you’re a bull on USD/CAD, it’s probably a good idea to wait for a retest of the previous support area and see if it holds. But unless the fundamental/geopolitical picture changes, this is a low odds bet for the next session as traders will likely remain in sell mode on USD/CAD.