USD Sits Near Support Ahead of FOMC & NFP, CAD during 14-Month Lows

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Talking Points:

Why FOMC might not be a tier-1 eventuality of a week

USD/CAD pushes into 14-month highs, eyeing 61.8% retracement of 2016 range

Crude Oil breaks down toward new $47.11 focus

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Ahead of tomorrow’s FOMC meeting, a USD fails to locate a bid. However, when one looks during a data, it’s not surprising. Tier-1 mercantile information has been consistently weak, and it has led some traders to consternation either or not it is adequate to get a Fed to plead that a serve weakening in a US mercantile information could spin a sure-fire three-hike devise in 2017 into a two-hike plan. Few are awaiting such a disclosure, though even a amiable FOMC followed by a soft-NFP could be adequate to send a DXY to new 2017 lows.

Speaking of 2017 lows, a Canadian Dollar has left a approach of Crude Oil and continues to find new sellers. Out of a commodity bloc, a Canadian Dollar or Loonie has been a misfortune performer, and it could be due to a association of a US economy and Crude Oil, both of that are unwell to enthuse investors during a start of May.

Looking during Crude Oil, a 12% dump given Apr 12 should have longer-term bulls right worried. We’ve prolonged been examination a late Mar low ($47.08/11) as support that should reason if a longer-term Bullish structure will say any merit. Much of a offered we’ve seen has been though disastrous Crude Oil headlines and serve concessions from OPEC members that a delay of a supply quell is expected. However, as we’ve remarkable on a FX Closing Bell webinars, OPEC is starting to sound like a executive banks during a start of unsuccessful QE programs. The problem with supply and direct economics as a Bank of Japan can demonstrate to, is that it’s formidable to put a specific apportion (as in Quantitative Easing) that will change a emotions of traders disturbed about a longer-term fundamentals. It could be that OPEC is descending into a identical trap, that could meant we could be in for a bearish summer for wanton oil.

Would we like to see what a Analysts Forecast for Crude Oil longer-term? Find out here!

Closing Bell’s Top Chart: May 2, 2017, Crude Oil barrels down towards a Mar low ($47.08/11)

USD Sits Near Support Ahead of FOMC amp; NFP, CAD during 14-Month Lows

Tomorrow’s Main Event: USD Federal Open Market Committee Rate Decision (MAY 03)

A rate travel is not expected, though superintendence is desired. The US information has been really weak, though a speeches from Fed members in week’s past have supposing certainty that they will hang to 3 hikes in 2017. Any justification that a Fed could change down expectations to dual hikes if a diseased information is sustained could give reason adequate for USD bears to pile-on. Regardless of a wordiness from Wednesday’s FOMC, NFP on Friday will be judged by what a Fed paints as a approaching mercantile design going brazen and could assistance beam a USD brazen for May.

IG Trader Sentiment Highlight:JPY buyers might be fighting a losing battle

USD Sits Near Support Ahead of FOMC amp; NFP, CAD during 14-Month Lows

USDJPY: As of May 2, retail trader information shows 56.9% of traders are net-long with a ratio of traders prolonged to brief during 1.32 to 1. In fact, traders have remained net-long given Jan 09 when USDJPY traded nearby 117.828; theprice has changed 5.4% reduce given then. The series of traders net-long is 6.0% reduce than yesterday and 25.0% reduce from final week, while a series of traders net-short is 6.5% reduce than yesterday and 68.5% aloft from final week.

We typically take a contrarian perspective to throng sentiment, and a fact traders are net-long suggests USDJPY prices might continue to fall. Positioning is some-more net-long than yesterday though reduction net-long from final week. The mixed of stream perspective and new changes gives us a serve churned USDJPY trade bias.(Emphasis Mine)

What is notable to me is that we see aweek-over-week net-shorts boost on mixed JPY crosses. This could be opening adult a doorway for serve JPY debility as we typically take a contrarian perspective to throng sentiment.

Written by Tyler Yell, CMT, Currency Analyst Trading Instructor for DailyFX.com

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