EUR/CAD may have found support from a short-term area of interest.
Is the pair ready to extend its intraweek uptrend?
Before moving on, ICYMI, yesterday’s watchlist checked out AUD/USD’s support zone ahead of mid-tier U.S. data releases and Powell’s speech. Be sure to check out if it’s still a good play!
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
U.S. weekly jobless claims fell to 198K vs. 211K the previous week; continuing claims rose from 1.705M to 1.734M
Philly Fed Manufacturing Index for October: -9.0 (-7.0 forecast; -13.5 previous); Prices paid Index: 23.1 vs. 25.7 previous; Employment Index at 4.0 vs. -5.7 previous
U.S. Existing Home Sales for September: -2.0% m/m (-3.5% m/m previous; -0.7% m/m forecast)
Fed Chair Powell gave a speech at the Economic Club of New York; comments that the committee will proceed carefully, hinting at another interest rate hold at the next meeting. But given the resiliency of economic data, they are still open to another hike if necessary.
New Zealand’s trade deficit shrank from 2.273B NZD to 2.329B NZD in September with both exports (-18% y/y) and imports (-15% y/y) falling for the month
U.K. GfK consumer confidence worsened from -21 to -30 in October as accelerating energy and mortgage costs and Middle East uncertainties weighed on confidence
Japan’s national core inflation slowed down from 3.1% y/y to 2.8% y/y in September, its first reading below 3% for the first time in more than a year
China’s loan prime rates remain unchanged at 3.45% (1-year) and 4.20% (5-year) respectively
PBoC injected 733B yuan worth of cash via reverse repurchase contracts on Friday – the largest since April – to help ensure funding costs in its financial markets
BOJ offered five-year loans against collateral to financial institutions after Japan’s 10-year yields hit a fresh decade high
Germany’s producer prices dipped by 0.2% (vs. 0.4% expected, 0.3% previous) and 14.7% lower from a year ago in September
U.K.’s retail activity slowed down by 0.9% in September(vs. -0.3% expected, 0.4% previous)
U.K.’s net public borrowing shot up from 10.6B GBP to 13.5B GBP in September
Price Action News
Commodity-related currencies like AUD and NZD once again saw increased volatility thanks to concerns of a possible escalation of the Israel-Hamas over the weekend.
The Canadian dollar also saw higher-than-expected volatility, but the comdoll benefited from all the uncertainty. Specifically, CAD was given a lift by rising crude oil prices.
CAD is up against all of its major counterparts so far today. It has seen the most gains against AUD and NZD and has gained the least against EUR and USD.
Upcoming Potential Catalysts on the Economic Calendar:
Canada’s retail sales at 12:30 pm GMT
FOMC member Harker to give a speech at 1:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
As mentioned above, at least some traders are worried about a possible escalation of armed conflict between Israel and Hamas over the weekend.
This is probably why the euro traded slightly lower against the oil-related Canadian dollar.
EUR/CAD briefly traded below the 1.4500 psychological handle before some buyers stepped in. And why not? As you can see, 1.4500 is right around today’s 15-minute Pivot Point lines as well as the chart’s 100 SMA.
Are we looking at a pullback opportunity before EUR/CAD extends its intraweek uptrend?
Canada is set to print its retail sales report during the U.S. session and the economic calendars tell us that we’ll likely see weaker retail activity in August.
If traders ease up on their Israel-Hamas concerns, or if Canada’s retail sales print weak as markets are expecting, then EUR/CAD may retest its weekly highs near 1.4530.
But if U.S. session traders jump in the pro-oil (and pro-CAD) trades, then EUR/CAD may see new intraday lows and maybe revisit the 1.4470 previous area of interest before attracting more buyers.
Watch this one closely, yo!