Risk sentiment is solidly negative to start the new week and with no major catalysts immediately ahead, this technical setup on USD/CAD one to watch! Will the bulls hold or is a reversal / fakeout ahead?
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Fresh Market Headlines & Economic Data:
Upcoming Potential Catalysts on the Economic Calendar
Fed Brainard speech at 4:00 pm GMT
Fed Kaplan & Fed Williams speeches at 10:00 pm GMT
RBA Debelle speech at 12:30 am GMT (Sept. 22)
What to Watch: USD/CAD
On the one hour chart above of USD/CAD we can see the pair breaking higher, likely due to a combination of negative risk sentiment as coronavirus fears grow, and as oil prices take a dip on the session.
With no major catalysts ahead other than Fed speak for the rest of this session, we think traders could remain focused on these themes for the time being and volatility could remain higher for the rest of the session, especially if we see surprise commentary from Federal Reserve members later.
Going long at these levels is a low probability setup, but consider scaling in on a pullback or just waiting for a 40 – 50 pullback to last week’s short-term highs before building a long position.
For the bears on USD/CAD, with the trend firmly in the hands of the bulls, watch out for bearish commentary from the Fed officials before considering a short position.
For the brave, the current move higher looks to be over extended, so a very short-term short with nibbler position is an option to consider. Keep in mind it is a low probability option unless we do get dollar bearish comments from Fed speakers later in the day.