Our trade call today is buying USDCAD at market as we anticipate a deal with Iran and a cut or dovishness by the BOC. Stop is at 1.2640 and TP will depend on the BOC decision and statement, with the most ambitious target being at 1.2990.
During the Asian session NAB Business Confidence for Australia printed at 10, up from the prior of 7 (revised to 8). The Aussie saw some modest strength during the session, rising 45 pips from lows.
Overall, trading has been light in Asia as we look ahead to a huge day for the pound with CPI and Inflation Report Hearings where we may hear comments regarding the budget’s effect on monetary policy.
We are also looking out for any confirmation regarding Iranian nuclear talks. A deal may increase oil supply expectations and weigh on CAD, which will align with our bearish expectations leading into the rate decision tomorrow. The OIS market is pricing in a 40% chance of rate cut. The BOC may have to factor a lower oil price into their decision.
We will be monitoring levels of support and resistance in unison with any impactful news and the underlying fundamentals in order to find a high probability trade. Support and resistance includes previous highs and lows (horizontal s/r), trendlines, moving averages, fibonacci retracements, daily pivot levels and round numbers. These levels of support and resistance are most effective when there are several of them converging at the same area (confluence).
Other Market Moving News:
Today’s major events include UK CPI and Inflation Report Hearings, German ZEW figures. Later in the US session we will have Retail Sales from the USA. Take a look at my weekly Forex news events overview here if you want to recap those events.
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Source:: Buying USDCAD – Forex Trading Tips