USD/CAD Eyes Monthly Opening Range Ahead of BoC Meeting

Talking Points:

USD/CAD Eyes Monthly Opening Range as Canada Employment Beats Forecast.

GBP/USD Weakness to Persist on Slowing U.K. CPI, Average Weekly Earnings.

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USD/CAD Daily Chart

Chart – Created Using Trading View

  • USD/CAD continues to give behind a allege from progressing this month as Canada Employment exceeds marketplace expectations, with a segment adding another 19.4K jobs in March, while U.S. Non-Farm Payrolls (NFP) increasing 98K during a same duration amid forecasts for a 180K expansion.
  • The unsuccessful try to break/close above a Fibonacci overlie around 1.3450 (23.6% retracement) to 1.3460 (61.8% retracement) shifts a near-term opinion towards a downside generally as USD/CAD triggers a array of reduce highs lows; will continue to guard a developments in a Relative Strength Index (RSI) as former trendline support appears to be charity resistance.
  • The uptick in a Labor Force Participation Rate accompanied by a ongoing pickup in full-time positions might put increasing vigour on a Bank of Canada (BoC) to lift a benchmark seductiveness rate off of a record-low, yet Governor Stephen Poloz might continue to validate a wait-and-see proceed during a assembly on Apr 12 as a executive bank conduct warns normalizing financial process betimes would pull a economy behind into recession; in turn, some-more of a same from Poloz Co. might moderate a seductiveness of a Canadian dollar as it drags on interest-rate expectations.
  • Broader opinion for USD/CAD stays constructive as it preserves a ceiling trend carried over from a prior year, yet a miss of movement to exam a 2017-high (1.3535) might hint a pierce behind towards a Fibonacci overlie around 1.3280 (50% retracement) to 1.3310 (38.2% retracement), that mostly lines adult with a Apr low (1.3295).


GBP/USD Daily Chart

Chart – Created Using Trading View

  • Despite a initial spike aloft immediately following NFPs, GBP/USD struggles to reason a belligerent as marketplace participants change their concentration to a Underemployment Rate (U6), that slipped to an annualized 8.9% from 9.2% in Feb to symbol a lowest reading given 2007; notwithstanding a churned information prints, Fed Fund Futures continue to prominence a larger than 60% for a Jun rate-hike, and a devious paths for financial process casts a long-term bearish opinion for Cable as a Bank of England (BoE) appears to be in no rush to lift a benchmark seductiveness rate off of a record-low.
  • The British Pound stands during risk of confronting serve waste over a days forward as a U.K. Consumer Price Index (CPI) is approaching to slight in March, while Average Hourly Earnings are projected to downtick to an annualized 2.1% from 2.2% in January; signs of negligence price/wage enlargement might inspire a Bank of England (BoE) to keep a stream process via 2017 as executive bank officials advise ‘monetary process can respond, in possibly direction.’
  • Even yet a BoE appears to be on march to finish a Corporate-Bond squeeze module forward of a 18-month timeline, Governor Mark Carney and Co. might try to buy some-more time during a subsequent process assembly on May 11 amid a mixed information prints entrance out of a U.K. economy, and a executive bank might keep a doorway open to serve support a economy as a depart from a European Union (EU) clouds a opinion for enlargement and inflation.
  • With that said, downside targets are in concentration for GBP/USD generally as a RSI struggles to safety a bullish arrangement carried over from a prior month; a break/close subsequent 1.2370 (50% expansion) opens adult a subsequent downside segment of seductiveness around 1.2270 (23.6% retracement) followed by 1.2100 (61.8% expansion).

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— Written by David Song, Currency Analyst

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