Last Friday’s NFP was disappointing. The reaction of the markets was astonishing. Will it last longer? Let's find out the main trade opportunities for the upcoming week.
USD/CAD: outlook for July 17-21
2019-11-11 • Updated
USD/CAD fell below 1.2680 in the past week after the Bank of Canada raised its benchmark rate by 25 basis points to 0.75%. While markets had priced in a rate hike, the central bank’s a much more hawkish rhetoric was a real surprise for them and busted the CAD further. The neutral tone delivered by Fed Chair Janet Yellen during her testimony to the US Congress has also resulted in a rapid depreciation of the USD. A relative surge in oil prices has also contributed to the Loonie’s appreciation.
At their recent meeting, the BOC’s officials dismissed the lack of inflation as temporary. But following the rate increase they will likely become more data dependent trying to assess the impact of policy tightening in the context of heightened household indebtedness. This makes the next week’s inflation data very important. A print below market expectation might result in Loonie’s depreciation. Another focus will be on the Canadian foreign security purchases and manufacturing sales coming on Monday and Wednesday respectively. From the US we will get the US empire state manufacturing index on Monday, some housing data on Wednesday and Philly Fed Manufacturing index on Thursday.
USD/CAD is trading near 1.2725 now. As Stochastic is still in the oversold area there might be an extension of the recent rebound towards the resistances at 1.2820, 1.3015. A return of quotes below the Wednesday’s low of 1.2678 and subsequent breach of this level would allow us to target lower levels. But in the short-term, the following scenario will unlike realize.
USD/CAD continues dipping. Follow US jobless claims and the speech of Fed’s Powell!
The mix of economic reports from Canada and the USA will have a huge impact on the pair! Get ready with us!
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates?
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?