Bounce or break? USD/CAD is hanging out at the bottom of its short-term range and waiting for the next catalysts for a move.
Before moving on, ICYMI, today’s Daily Asia-London Session Watchlist looked at CAD/JPY’s descending trend line setup ahead of oil inventory data. Be sure to check that out to see if there is still a potential play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- U.S. CPI figures beat expectations, headline figure up 0.6%
- New Zealand visitor arrivals down 2.8% in February
- API reported reduction of 3.6 million barrels in crude oil stockpiles
- Australia’s Westpac consumer confidence index up by 6.2% in April
- Japanese core machinery orders slumped by 8.5% vs. expected 2.4% gain
- RBNZ kept interest rates on hold at 0.25% as expected
- U.S. pauses the use of J&J vaccine following rare blood clot issues
Upcoming Potential Catalysts on the Economic Calendar:
- ECB head Lagarde’s speech at 3:00 pm GMT
- U.S. EIA crude oil inventories report at 3:30 pm GMT
- Fed head Powell’s testimony at 5:00 pm GMT
- U.S. Beige Book due 7:00 pm GMT
- Fed officials Williams, Clarida, and Bostic to give speeches
What to Watch: USD/CAD
Check out this pair sitting right at the bottom of its short-term range!
USD/CAD is still deciding whether to make a bounce or a break from support, and it could all boil down to the upcoming catalysts in the New York session.The Department of Energy will be reporting the latest crude oil inventory figures, and a draw of 2.4 million barrels is eyed. This would be smaller than the earlier reduction of 3.5 million barrels, which suggests that demand has weakened.
However, the API just recently reported a draw of 3.6 million barrels, so an upside surprise might be in the works. If that’s the case, Black Crack and the positively correlated CAD might be in for more gains!
Another potential catalyst for a big move is Fed head Powell’s speech, which comes right before the release of the central bank’s Beige Book. A number of FOMC officials are lined up to make testimonies later in the day as well.Note that the Fed has been downplaying the need to hike tighten policy even with the surge in Treasury yields, explaining that this is merely a sign of good growth prospects for the U.S. economy.
Reiterating this view could mean more downside for the U.S. currency, as dollar bulls might be disappointed that they won’t see rate hikes anytime soon.
Just be mindful, though, that Stochastic is starting to pull up from the oversold region to indicate a possible return in bullish pressure. If that’s the case, USD/CAD might still bounce back to the range resistance or at least until the area of interest at the middle.