Rising oil prices and the constant potential for Brexit volatility spikes for the pound makes this textbook technical setup on GBP/CAD one to watch for the session.
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Fresh Market Headlines & Economic data:
- Oil prices rise to 2019 highs on OPEC cuts, U.S. sanctions
- US economic growth is set to slow sharply this year and next, according to CNBC’s Fed survey
- UK jobless rate hits 44-year low of 3.9% despite Brexit uncertainty
- UK faces no-deal or no Brexit if it rejects May’s deal: Barclay
- European ministers warn Theresa May they are ‘exhausted’ from negotiations following John Bercow’s intervention
- German investors cheered by hopes of Brexit delay, trade progress
- Australia house prices fall faster than during global financial crisis
Upcoming Potential Catalysts on the Forex Calendar:
- New Zealand global dairy trade prices (tentative)
- New Zealand current account at 9:45 pm GMT
- Australia leading index at 11:30 pm GMT
- Bank of Japan monetary policy meeting minutes at 11:50 pm GMT
- RBA Bullock speech at 12:00 am GMT (Mar. 19)
- U.K. CPI at 9:30 am GMT (Mar. 19)
What to Watch: GBP/CAD
Loonie pairs spiked higher on the session, possibly rolling with the rally higher in the oil markets today after effectively extends output cuts to June after cancelling their April meeting. It’s also possible that Canadian dollar traders are positioning ahead of the release of the Canadian government’s annual budget, which could give insight as to whether we’ll see stimulative actions for the economy. That release is tentative, so there may be more volatility ahead after the budget release.
So we think GBP/CAD is the pair to watch on the session because of oil and the upcoming Canadian event, but also on the perpetual high chance of movement from the ongoing Brexit situation in the U.K. We’ve also got top tier economic data from the U.K. coming soon in the form of inflation data as seen above. Sterling is likely to see volatility as well as always, which could likely draw in more traders when headlines pop up or when technical setups like the one we’re seeing today arise.
Today, thanks to the Loonie, GBP/CAD just broke below a rising ‘lows’ pattern and a major area of interest around the 1.7600 handle. If you’re a bear, the R:R to the major swing low around 1.7400 looks pretty good if using the daily ATR of around 180 pips. It’s reachable with the right data / headline push within the next few sessions. If you’re a bull, the R:R potential looks a lot less enticing given that strong resistance area around 1.7750, but if it can break above that, there’s really no resistance in sight until around 1.8100 to 1.8300, which makes this pair great addition to a longer-term watchlist.