The Canadian dollar was trading flattish on Tuesday and was seen hovering around 1.2550 during the London session. The Loonie ignored rising oil so far, which was nearly 1% stronger on the day.
The correlation between the Canadian dollar and oil has been broken in the previous weeks and the Loonie kept strengthening, while oil headed lower from the 50 USD mark.
Traders will focus on retail sales from Canada, which are projected to slow to 0.3% from 0.6% previously, whilst the ex-auto gauge is expected to tick higher to 0.0% from -0.1% in the previous month. Mixed data should not cause major volatility on the CAD, however, if there will be a surprise, the Loonie might push toward the 1.25 mark.
There are no major US data on the agenda today, apart from the house price index, which is a minor indicator only. More US numbers will come on Wednesday, including the PMI indices and new home sales.
The resistance appears to be around previous highs at 1.2615 and as long as the pair trades below, the outlook seems bearish. If broken, further rise toward the 1.27 mark might occur. The pair dropped below the short-term bullish trend line, which could also be another bearish signal.
On the other hand, the support stands around current swing lows near 1.2550 and failure to hold it could mean a depreciation toward the psychological level of 1.25. In all cases we strongly recommend to have rigorous money and risk management.
The European indices were broadly lower on Monday, with the EU50 index dropping more than 0.50%, while the German DAX was seen declining 0.40% during the London session. The falling euro failed to boost EU stocks as the EURUSD pair slid 0.25%.
Equities worldwide have been falling after White House economic adviser Gary Cohn criticized Donald Trump for his behavior toward the deadly white nationalist rally in Charlottesville. Many people on Wall Street advised Gary to step down. He is one of the most important people in the Trump administrative and should he resign, the tax reform might be delayed further.
As the tax reform has been one of the main drivers of the current stock rally, investors have been taking profits and pushed stocks notably lower.
The EU50 index is again breaking below the key support of 3,430 EUR, which could confirm the end of the bullish trend. The next critical support is at the 200 dma around 3,400 EUR. If the index closes below these two zones, a larger correction might occur.
On the other hand, the resistance for Monday’s trading is at 3,450 EUR and while the index trades below, the outlook seems bearish. In all cases we strongly recommend to have rigorous money and risk management.
It was a very volatile day on Thursday, with the euro-loonie cross dropping sharply in the first half of the day, just to erase all the losses during the US session and it managed to close in green. The cross was seen flattish during the London session on Friday and was hovering around 1.4950.
Investors will now focus on two important things today: The first one is the euro zone’s current account for June, which is predicted to weaken month-on-month. The big surplus of current account has been helping the euro in the previous months and signs of weakness might undermine the shared currency.
The next thing to cause volatility are the Canadian CPI numbers. The market expects a moderate improvement on the yearly basis to 1.2% from 1.0% booked previously, while the core inflation should stay unchanged at 0.9% year-on-year. Somewhat positive numbers could boost the Canadian dollar.
The daily setup is looking very interesting. The pair posted a strong bullish pin bar, which is a reversal pattern. In addition, yesterday’s sell-off stopped at the 100 day moving average along with the bullish trend line, which are boosting significance of this pin bar.
The supports are seen around 1.47750 and 1.4740 and if broken, further depreciation toward 1.4660 might occur. On the other hand, the resistance is at 1.49 and if not held, the next target for bulls could be at the psychological level of 1.50. In all cases we strongly recommend to have rigorous money and risk management.
The AUDNZD cross was trading elevated on Thursday, with a 0.35% gain during the London session and was seen hovering around 1.0875 in the morning.
Australian employment change surprised on the upside and came out at 27,900, up from 20,000 previously, whilst the unemployment rate eased a notch to 5.6%. The Australian dollar surged after these news.
Shortly before, the PPI indices from New Zealand were released. The input index rose from 0.8% to 1.4% year-on-year and the output inflation ticked lower to 1.3% from 1.4% previously, but managed to beat the estimate of 0.7%. However, the NZD dollar failed to rally after these data.
Investors will now pay attention to some US data, including the Philly Fed manufacturing index, unemployment claims and capacity utilization along with industrial production.
The first support is at previous highs near 1.0850. As long as the cross trades above, the bullish outlook prevails. The next support is located at 1.08.
On the other hand, the strong resistance is at 1.0940. In all cases we strongly recommend to have rigorous money and risk management.
The USDJPY pair rose for the third consecutive day on Wednesday and was seen gaining 0.25% during the London session, trading slightly below the 111 level.
As previously mentioned, sentiment improved markedly in the last days as North Korea backed from their plan to attack the US island of Gaum in the Pacific. The worst might be over for now. Therefore, all safe haven assets such as the yen, franc or gold were sold-off and investors piled back into stocks.
Global equity markets have been rising since Monday and EU stocks were 1% stronger on Wednesday, with US futures lagging a bit.
The US calendar will bring building permits and housing starts, which might cause some volatility on the financial markets. However, the most focus will be on today’s FOMC minutes from the July’s Fed meeting, which was taken as slightly more dovish than analysts had expected.
The pair is now testing a strong confluence of resistances> the bearish trend line from previous highs, along with previous swing tops. This selling zone is located near the 111 handle. If broken, further rise toward 111.50 could occur.
On the other hand, the support for Wednesday is seen near 110.60 and if not held, the greenback might retreat closer to the 110 level. In all cases we strongly recommend to have rigorous money and risk management.