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With a light calendar ahead and the holiday environment right around the corner, today’s GDP from Canada and Sterling’s momentum is one of the few setups to watch.

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Fresh Market Headlines & Economic Data:

Upcoming Potential Catalysts on the Forex Calendar for U.S. & Asia:

  • Bank of Japan Monetary policy meeting minutes at 11:50 pm GMT
  • Richmond Fed manufacturing index at 3:00 pm GMT (Dec. 24)
  • API Crude oil inventories at 9:30 pm GMT (Dec. 24)

What to Watch: GBP/CAD

GBP/CAD 1-Hour Forex Chart
GBP/CAD 1-Hour Forex Chart

Traders definitely seem to be in holiday mode as FX volatility has been quieter than usual. But we are seeing a little bit of action in GBP/CAD with a little bounce in the works after a disappointing monthly GDP read from Canada. This  actually sets up a potential swing opportunity for the bulls, while the bears may see a swing opportunity form from today’s price action sometime this week.

First, if you’re a bull on GBP/CAD, the argument for a continued short-term bounce could be some end-of-year profit taking on Sterlings recent run lower combined with today’s disappointing GDP data from Canada. We’ve also got a technical setup in that we’re seeing a bullish divergence between price action and the stochastic indicator that could draw in technical buyers short-term. With a daily ATR of around 150 – 160 pips, the recent resistance around 1.7200 is a reasonable target if volatility picked up on surprise geopolitical news (U.S.-China trade or Brexit updates) within the next session or two.

If you’re a bear on GBP/CAD, the trend is still in your favor but the arguments for a bounce shouldn’t be ignored. It’s probably a good to wait for a bounce to materialize and if the pair does retest the previous resistance area around 1.7200 and reversal patterns emerge, then it looks like an opportunity to play the major longer-term themes at a better price, if you think the environment will continue for the next week or so.