We expressed our view yesterday that USDCAD would be sold, and the pair dropped 77 pips before it has met some buying at technical support. In the Daily Market Commentary video yesterday we suggested that the pair would be sold at 1.3245 resistance and move to 1.3126 – 1.3163 range, where buyers would be likely to step in again. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we do not provide investment advice.
The BOC rate decision was also exactly what was expected, the bank kept the rate at 0.25% and their QE remained unchanged at $5B per week. The bank dropped the wording that promised more monetary stimulus if needed. The pair is trading at support and now we need to see if buyers are motivated enough to seriously step in and take USDCAD higher or if more consolidation is needed. EURUSD reactions to the ECB press conference and the oil price fluctuations are likely factors impacting the USDCAD pair also.
WTI Crude rally from our target level faltered yesterday as the price neared the $38.50 resistance we highlighted in the video yesterday. Sellers came in at $38.43 and pushed the price of oil to an intraday support at $37.60. The $38.50 resistance is still a key level that needs to be conquered. The fundamental backdrop of low demand is still there and crude oil is currently stored in tankers as supply is exceeding demand. Look for volatility in oil if the change US Crude Oil Inventories deviate strongly from analyst expectations of -3.1M barrels. The numbers are due today at 3 pm GMT. For more insights and analysis see our Daily Market Commentary videos here.
The ECB rate decision is due today and no change is expected here in Europe either. The analyst consensus expectation is that the rate will stay at 0.00% while the ECB officials are likely to try and see if they can talk the EURUSD lower. The pair was bought higher yesterday from one of our key supports at 1.1750. We pointed to this support yesterday saying it coincides with a rising channel low. A lot depends on the market reaction to the ECB press conference but if EURUD bulls can push the pair above yesterday’s high, there is a higher probability of price moving to the next resistance zone at 1.1960 – 1.2011. To trade high volatility events like this with our ultra-low trading fees, register for an account and deposit here.
In yesterday’s video, we highlighted the fact that USDCHF was trading at resistance created by the channel high, SMA resistance and resistance created by a recent daily high.
Risk sentiment returned and USDCHF sold off. The pair has since the publication of our analysis dropped over 50 pips and is now trading at 10-day SMA. Now it remains to be seen whether the consolidation will continue or whether we will see further declines. USDCHF has a high negative correlation with EURUSD so if our view on EURUSD uptrend continuing turns out to be right, then it’s more likely that USDCHF will at least test the 0.9000 support.
Recent macroeconomic data releases
- Canadian Employment Change, 245.8K (262.5K expected)
- Canadian Unemployment Rate, 10.2% (10.1% expected)
- US Average Hourly Earnings, 0.4% (0.0% expected)
- US Non-Farm Employment Change, 1371K (1385K expected)
- US Unemployment Rate 8.4%, (9.8% expected)
- Swiss Foreign Currency Reserves 848B
- Australian NAB Business Confidence -8
- BOC Overnight Rate, 0.25% (0.25% expected)
Macroeconomic data releases today & tomorrow
- ECB Main Refinancing Rate, 0.00% expected
- ECB Monetary Statement
- ECB Press Conference
- US Core PPI, 0.2% expected
- US PPI, 0.2% expected
- US Unemployment Claims, 838K expected
- US Crude Oil Inventories
- US CPI, 0.3% expected
- US Core CPI, 0.2%
You may access the times and dates in the economic calendar here.
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Chief Market Analyst
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