Today’s focus turns to GBP and CAD
The USD Index consolidated around 89.50 after a bunch of US data releases came in slightly above expectations, reminding everyone that the underlying US Fundamentals are strong! That’s something that has been forgotten amongst all the Trump trash talk the past month or two.
Sterling took a blow to the downside after average weekly earnings & the claimant count change came in worse than expected. It doesn’t completely derail the expected rate hike by the BOE in May but if more weak data were to follow, like today’s CPI data, then it could change the BOE picture somewhat and that would see a decent fall in GBPUSD.
Japanese Trade Balance data came in much better than expected and that gave the Nikkei a much-needed boost and took USDJPY for a run to the topside with it.
So I’d be looking to get long USDJPY or JPY crosses for at least the Asian session.
The main focus today is GBP & CAD.
Sterling – We have the extremely high impacting UK CPI scheduled.
The forecast is: M/M 0.3% Y/Y 2.7%
The result will be hugely important for next months BOE rate decision, especially on the back of yesterdays slightly weaker employment data.
GBPUSD & GBP crosses will all be in play.
Canadian dollar – Bank of Canada Rate decision.
It goes without saying this is huge. The BOC is expected to keep rates on hold but there’s always a chance of a surprise move. If there is no change then keep a close eye on the ‘Statement’ as that should be hawkish at the very least.
USDCAD & CAD crosses will all be in play.
Check our Next Best Trades Watchlist for full details as to which specific pairs we are focusing on.
I missed the Japanese data which turns out to be a real shame as it came in much better than expected, driving USDJPY higher.
If you did manage to get on it, just remember, it’s not a long-term trade with all the ongoing geopolitical issues cooking.
I would be more inclined to be looking to play the USDJPY & JPY crosses from the long side today.
The UK CPI data will be the main show so that’s where your focus should be.
Sterling has technical support around 1.4285 (at the time of writing) which may provide a good entry level for the release.
This will be extremely lively so I’ll be looking to trade live if there is a decent level of variance.
The smart thing to do is fully analyze GBPUSD and all GBP crosses and trade the pairs that have the best technical set up. So GBPUSD may not be the one.
It’s going to be lively either way.
North American Session
The Bank of Canada interest rate decision is not only the major event, it is also the only event for the North American session, so it’s going to be huge as all traders will be focusing on it.
No change is forecast, but in my experience, expect the unexpected. The Statement may be the key if there is no change so in that there can be discrepancies or ambiguity so the smart thing to do is reduce your trade size.
Don’t worry it’ll be moving around so much you’ll still make the same cash, it’s just you have less risk on the table at the most volatile time, and that’s a smart thing!
Of course, our one nightmare situation is “Trump” saying something stupid before and soon after.
So just keep an eye on the news wires and also make sure you have tight trailing stops in play on your open positions.
Technical Set Up – What’s Happening with the Majors
Today’s Fundamental Drivers
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