Today’s focus turns to CAD

BOE comments

We had a solid day of trading in the European session yesterday after BOE comments and UK Retail Sales data came in much worse than expected at -1.2% MM versus -0.5% forecast.

This was third major UK release & they have all disappointed, pointing to a rapidly slowing UK economy.

Sterling wasn’t exactly an easy trade though. It dropped from 1.4195 to 1.4159 after the retail sales numbers were released and then slowly squeezed all the way back to 1.4246 (yesterday’s intraday high) before BOE Gov Mark Carney spoke up, acknowledging the run of weak domestic data. The market took that as meaning after next months hike, future rate hikes will be gradual over the next few years.

Sterling nose-dived and dropped to a fresh two week low of 1.4067, a solid 178 point range on the day. I expect Sterling to be a ‘sell on rallies’ scenario for some time until we get clearer details from the BOE.

Moving away from the BOE, the USD is still working away at the topside reaching a high of 89.95 on the Index. If the UK economy is anything to go by then I think we’re definitely going to see the USD pop to the topside any day now. It’s definitely building for a good move.

But first of all, we have to negotiate the Canadian CPI & Retail Sales data. This data comes at a great time, straight after the BOC meeting.

The CAD is hanging in the balance trading mid-range so, on the outset, it looks like a good trading opportunity either side of the market.

It’s definitely high impacting and the way traders are woofing into the data releases at the moment, it’s sure to be volatile.

Just remember, we need both data releases to be the same. i.e. both strong or both weak to get a cracking ‘consistent’ move!

Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.

Asian Session

We may have some activity on USDJPY today as we will be getting the latest Japanese CPI data early in the session.

The Nikkei is due to open -80 points. If the CPI data is significantly variant then that will influence the Nikkei and consequently USDJPY.

It’s definitely worth a look!

European Session

Not a lot of activity for the European session and I’d say most traders are relieved after a week of wild action on Sterling.

Keep an eye on the EURUSD though as we do have some German PPI data scheduled.

North American Session

The Canadian dollar is front and center with two big data releases, unfortunately at the same time.

As I mentioned above we really need the data to match up to get a good trade.

At the moment the USDCAD is trading mid-range so it could really go anywhere.

The smart thing to do is look across the board at all CAD crosses and nail the pairs with the best technical set up.

If there’s decent variance in the numbers then you can expect a wild move. So keep your trade size in check. Just remember you don’t have to make all your cash on one trade!

I hope you have a cracker!

Technical Set Up – What’s Happening with the Majors

The major currency pairs are all starting to correlate again. It’s the first time in a long time so let’s take advantage of it.

The USD is starting to make in-roads to the topside so we may see a continuation of recent moves over the coming week.

Today’s Fundamental Drivers

Plan the Trade, Trade the Plan!

The idea of our “Market Insight” is to give you some guidance with your daily preparation.

Your Daily Analysis needs to become habitual – For full guidance on our daily routine click here.

Make sure you don’t waste unnecessary time in front of the screens.

Remember you need to be fresh, confident and ready to trade and by sitting aimlessly in front of your screens you will become stale and uncertain.

The key to your success: Isolate the opportunities that work for you and focus on them.

Don’t worry about things that you can’t make…..chasing them will only cause problems (tiredness & irrational behavior will take over).

Tune up your charts & get ready to trade…..see you in the 247 Trade Zone!

Brad