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The downtrend in USD/CAD may be the play of the day with volatility likely to pop for the pair on fast approaching U.S. and Canadian data!

Intermarket Snapshot

Equity Markets Bond Yields Commodities
DAX: 10719.27 -0.43%
FTSE: 6800.95 -0.53%
S&P500: 2533.05 +0.04%
DJIA: 24468.99 +0.15%
US 10-yr 2.645% -0.014
Bund 10-YR 0.213% +0.006
UK 10-YR: 1.251% -0.026
JPN 10-YR: -0.011% +0.023
Oil: 48.48 +1.08%
Gold: 1292.80 +0.54%

Fresh Market Headlines & Economic data:

Upcoming Potential Catalysts on the Forex Calendar:

  • Canadian Ivey PMI at 3:00 pm GMT
  • U.S. ISM Non-Manufacturing PMI at 3:00 pm GMT

What to Watch: USD/CAD Downtrend

USD/CAD 15m
USD/CAD 15m

FX volatility is pretty light to start the new trading week with most pairs trading within their daily ATRs. That could change for USD/CAD soon as we will get two economic data points that will likely get the market moving for the North American currencies.

Canada’s Ivey PMI and the U.S. ISM Non-Manufacturing PMI are economic leading indicators on business conditions, so we could see movement in both currencies, especially if there is a big difference between the numbers we’re about to see and expectations, like what we saw last week with the ISM manufacturing PMI report.

If we do see a pop in volatility, for you bears out there the trend is on your side at the moment with USD/CAD seeing strong downside momentum since the start of the year. Shorting around current levels should have a favorable risk-to-reward given the lack of any near term support, but for conservative traders, a bounce up to Friday’s low/close and this week’s open is also an option to get in at better prices.

For the bulls, that same area between 1.3380 – 1.3400 should be where you are considering going long if the market can break higher and sustain any upside momentum if these top tier events we’ll see supports a strong Dollar and weaker Loonie.

Fresh developments in the major themes driving the markets like the U.S.-China Trade situation, Brexit negotiation updates and monetary policy updates from major central banks are still live as potential catalysts, so keep your risk very low when trading short-term.