U.S. retail sales for December: 0.6% m/m (0.4% forecast, 0.3% previous); Core retail sales: 0.4% m/m (0.2% forecast, 0.2% previous)
JPY, in particular, saw some bullish momentum as the U.S. dollar gave up some of its pips while the markets are still kinda worried about global growth.
JPY is trading in the green across the board, with the biggest gains logged against USD and CHF while AUD and GBP are seeing the least pips gained against the safe haven.
Upcoming Potential Catalysts on the Economic Calendar:
USD/CAD is sporting a possible reversal pattern ahead of today’s mid-tier economic reports.
NAHB: Falling mortgage rates have bumped up the U.S. builder confidence index for newly-built single-family homes from 37 to 44 in January
In an interview, ECB President Lagarde admitted that it’s “likely” that the central bank would raise its interest rates in the summer
Japan’s core machinery orders fell more sharply than expected, down by 4.9% m/m in November and underscored the uncertainty of domestic and global outlook
Melbourne Institute’s survey showed inflation expectations over the next 12 months from January were unchanged at 4.5%
New Zealand’s food price index slowed by 0.1% m/m (-0.2% previous) in December
U.S. industrial production for December: 0.1% m/m (-0.1% forecast, 0.0% previous)
On a technical basis, USD/CAD is now trading below both the 100 and 200 SMAs in the 15-minute time frame. In fact, the pair is sporting a possible Head and Shoulders bearish pattern with the S1 (1.3480) serving as the “neckline.”
Japan’s industrial production was confirmed at -0.9% m/m in November as expected
And now for the headlines that rocked the markets in the last trading sessions:
Fresh Market Headlines & Economic Data:
Fed’s January Beige Book report showed that “nearly all Districts cited one or more signs of a cooling labor market”
SNB Chairman Jordan to give a speech at 10:30 am GMT ECB meeting minutes at 12:30 pm GMT FOMC member Bostic to give a speech at 12:30 pm GMT U.S. initial jobless claims at 1:30 pm GMT U.S. Philly Fed manufacturing index at 1:30 pm GMT U.S. housing starts at 1:30 pm GMT ECB President Lagarde to give a speech at 3:15 pm GMT U.S. EIA crude oil inventories at 4:00 pm GMT BusinessNZ manufacturing index at 9:30 pm GMT Japan’s national core CPI at 11:30 pm GMT
Before moving on, ICYMI, yesterday’s watchlist checked out USD/JPY’s uptrend pullback ahead of the U.S. retail sales report. Be sure to check out if it’s still a good play!
Will we see a bearish breakout today? Or will USD/CAD extend its gains?
Is the dollar in for more losses against the Loonie?
Until we see bearish fundamental and technical triggers, though, USD bulls may have slightly more reasons to keep USD/CAD around the 1.3500 area or higher.
If the risk-friendly trading environment extends to the U.S. session trading, however, then we may see USD/CAD trade below the 1.3480 level that we’re watching.
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! ️
With not a lot of new, game-changing themes in the markets, some traders had time to take profits from their intraweek positions.
A bit of profit-taking from the U.S. dollar’s gains likely contributed to USD/CAD turning lower from the 1.3540 intraweek resistance and dipping back to its sub-1.3500 levels.
It may have also helped the oil-related Canadian dollar that geopolitical tensions in the Middle East are heating up, and that OPEC‘s latest outlook report was generally positive with 2024’s outlook unchanged and 2025’s figures estimated higher.
In its latest report, OPEC maintained its 2.2 million bpd oil demand for 2024, upped its 2025 demand outlook from 1.7 million bpd to 1.8 million bpd, and raised its 2025 GDP forecast from 2.6% to 2.8%
We’ll know more during the U.S. session when Uncle Sam prints a bunch of mid-tier economic reports. Better-than-expected data might bring the sexy back for the Greenback and draw enough USD/CAD buyers into retesting the 1.3500 Pivot Point and psychological level.
Watch the newswires closely to see if USD/CAD will hit its potential support level and how the markets will react if it does dip to the inflection point!
RICS: Lower mortgage pushed up U.K.’s housing market demand and helped improve the house price balance from -41% to -30% in December
Eurozone’s current account surplus for November: 24.6B EUR (30.9B EUR forecast, 32.3B EUR previous)
Price Action News
Australia’s unemployment rate remained at 3.9% as expected despite the labor market participation rate dipping from 67.3% to 67.1%
Australia lost a net 65.1K jobs in December – the second-largest loss since the 1993 recession – as 41,400 part-time jobs were offset by a 106,600 loss in full-time positions (15.4K forecast, 72.6K previous)
