Big day for AUD/CAD with both top tier economic events from both Australia and Canada, and the volatility should continue with more events ahead.
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Fresh Market Headlines & Economic data:
- Bank of Canada maintains overnight rate target at 1.75%
- U.S. nonfarm private sector employment +183K – ADP
- Difficult’ Brexit talks see no breakthrough, European Commission says
- Theresa May clashes with Corbyn at PMQs as EU officials reveal dire state of negotiations
- BOJ’s Harada says board shares view on need to ease if economy worsens
- BOJ’s Harada Breaks Consensus to Say Tax Hike Risks a Recession
- RBA keeps interest rates on hold, giving a cooling economy the benefit of the doubt
- Canada’s merchandise trade deficit widened from $2.0B in November to a record $4.6B in December
- Canada Ivey PMI drops to 50.6 vs. 54.7 previous
Upcoming Potential Catalysts on the Forex Calendar:
- Fed’s Williams speaks in New York at 5:00 pm GMT
- Fed’s Mester speaks in Ohio at 5:00 pm GMT
- BOE’s Saunders speaks in London at 5:30 pm GMT
- Fed releases Beige book at 7:00 pm GMT
- Australia trade balance and retail trade at 12:30 am GMT (Mar. 7)
- European Central Bank monetary policy statement at 12:45 pm GMT (Mar. 7)
What to Watch: AUD/CAD
Tough day for the Aussie after a very weak Australia GDP report, but it looks like Loonie traders got the scare as well from a very disappointing Ivey PMI read (50.6 vs. 54.7 previous) and a dovish Bank of Canada monetary policy statement (fourth quarter data much weaker than expected, outlook for first half of 2019 to be weaker than the BOC projected in January).
So while we got an Asia session drop, AUD/CAD is now popping back to the upside and likely on it’s way to retest a major resistance area around the 0.9475 handle. Will that area hold as resistance once again?
It’s quite possible as the economic situation in Australia seems more likely we’ll see rate cuts from the RBA this year, and that a retest, hold and reversal around 0.9475 would likely draw in more sellers. We’ve got more Aussie data ahead with retail sales and trade balance data in the lineup tomorrow, so the bears should look out for more bad data along with a reversal back to the downside as something to consider.
For the bulls, surprisingly positive Australia data would likely spark a break in resistance and possibly a strong move higher given the current weak Aussie sentiment. The next resistance area to be seen is around the January highs around .9575, which would be reachable within a session or two considering the daily average true range of around 70 pips for AUD/CAD.