There aren’t a lot of data releases in the next couple of hours, which means that the major currencies will likely extend their intraweek trends.
What do you think of USD/CAD’s uptrend?
Before moving on, ICYMI, today’s Asia-London session watchlist looked at EUR/AUD’s divergence amidst Australia’s lockdown and ahead of the Eurozone’s mid-tier economic releases. Be sure to check that out if it’s still a valid play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
- Japan’s core inflation hits 15-month high on energy costs
- Australian central bank’s policy optimism tested by lockdowns
- China holds benchmark lending rate for 15th straight month
- Australia’s Victoria extends COVID-19 lockdown by seven days
- Stocks falter as virus outbreaks fan global recovery fears
- AUD, NZD near recent lows as risk appetite wanes, bonds gain
Upcoming Potential Catalysts on the Economic Calendar:
- U.S. building permits at 12:30 pm GMT
- U.S. housing starts at 12:30 pm GMT
What to Watch: USD/CAD
USD/CAD flirted with the 1.2800 psychological handle yesterday thanks to the combo of risk aversion and global lockdown concerns weighing on the oil-related Loonie and boosting the safe-haven dollar.
The pair is now forming a possible bullish flag on the 1-hour time frame with a support around the 1.2730 area.
Today’s price action will tell if USD/CAD bulls will make a run for the 1.2900 and the 1.3000 inflection points.
There won’t be any top-tier economic release during the U.S. session, so traders will likely play the existing concerns around the Delta COVID-19 variant and its impact on future economic activities and the pace of monetary policy tapering among the major central bankers.
If more traders price in the OPEC and friends’ decision to ease their production restrictions amidst lockdown risks, or if more traders flock to the safe-haven dollar, then USD/CAD could make new weekly highs.
But if we see risk-taking or if some dollar bulls take profits from their intraweek gains, then USD/CAD could pull back all the way to its Fib retracement levels or even its short-term trend line support.