With the NFP report and Canadian Ivey PMI coming up, I’m expecting big moves from USD/CAD in the next trading session.
Before we look at the potential setup, let’s review the top headlines that moved the forex scene in the past sessions:
- U.S. initial jobless claims at 745K vs. 758K expected, 736K previous
- U.S. factory orders up 2.6% vs. 2.2% consensus
- U.S. Treasury yields spike again after Powell’s speech
- U.S. Senate delays vote on $1.9 trillion aid bill
- Australia’s AIG services index up from 54.3 to 55.8
- Crude oil prices tick higher as OPEC+ extended output deal to April
- China sets modest 6% GDP target even as economy improves
- BOJ Governor Kuroda: Japanese economy picking up, higher yields reducing impact of easing
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. NFP figure, jobless rate and average hourly earnings at 1:30 pm GMT
- Canadian Ivey PMI at 3:00 pm GMT
What to Watch: USD/CAD
I’m seeing a potential reversal play on this pair, and we’ve got economic catalysts that could make it happen!
USD/CAD is inching closer to testing the neckline of its inverted head and shoulders pattern, and a break above this 1.2700 resistance could confirm that a rally is underway.Technical indicators suggest that buyers could have the upper hand since the moving averages made a bullish crossover while Stochastic is still heading north. The oscillator is already approaching overbought territory, though, so dollar bulls might need a break soon.
This could all hinge on the upcoming NFP release, which is expected to show a stronger pace of hiring at 197K for February versus the earlier 49K gain. An even larger pickup in employment could spur strong gains for the Greenback since this would point to better recovery prospects.
Meanwhile, the oil-related Loonie is drawing some support from the OPEC+ decision to extend its output deal until April, but it looks like the surprise build in EIA stockpiles is still keeping Black Crack gains in check.
Don’t forget to keep tabs on Canada’s Ivey PMI due later on, too! This is slated to show a slight improvement from 48.4 to 49.2, which would reflect a slower pace of contraction.
Upbeat results or a return to industry expansion above 50.0 could be your cue to close any short CAD positions. Better take note of the average USD/CAD volatility when setting stops and targets as well.
