USD/CAD is trading inside a short-term falling wedge pattern.
Will we see a breakout today?
Before moving on, ICYMI, today’s Asia-London session watchlist checked out GBP/CHF’s uptrend ahead of inflation reports scheduled in the U.K. Be sure to check 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 Sept trade figures add to evidence that bottlenecks are affecting global trade
China commodity prices tumble after planner mulls coal intervention
UK inflation unexpectedly cools in Sept despite higher fuel and transport costs
Yen hits four-year low versus dollar as risk appetite improves
Gold rises as subdued dollar counters elevated U.S. bond yields
UK house prices rise 10.6% in year to August – ONS
Upcoming Potential Catalysts on the Economic Calendar:
Eurozone’s final CPI numbers at 9:00 am GMT
Canada’s inflation reports at 12:30 pm GMT
EIA crude oil inventories at 2:30 pm GMT
If you’re not familiar with the forex market’s main trading sessions, check out our Forex Market Hours tool.
What to Watch: USD/CAD
The biggest data scheduled for release during the U.S. session will be Canada’s September consumer price increases.
Monthly inflation is expected to print at 0.1%, which may be enough to push annual inflation from 4.1% to 4.3% and spur another round of interest rate hike speculations for the Bank of Canada (BOC).In case you were too busy singing Adele’s Easy On Me, you should know that a risk-friendly trading environment has dragged on the dollar and put Fed rate hike speculations in the backseat so far this week.
Let’s see if U.S. session traders are in the mood to extend intraweek trends.
If today’s Canadian inflation reports put the spotlight on the BOC and its potential rate hike, then we could see USD/CAD drop back to 1.2300 and probably make new weekly lows.
But if higher Treasury yields trump risk-taking today, or if Canada’s consumer prices don’t rise as quickly as many had expected, then USD/CAD’s falling wedge candlestick pattern could lead to an upside breakout.
Watch out for USD/CAD breaking above the trend line and 100 SMA resistance levels and make trading plans for a possible test of the 200 SMA or the 1.2450 area of interest if we see a dollar-friendly trading environment today.