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Daily Forex News and Watchlist: USD/CAD

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Uncle Sam is about to drop its first top-tier reports of the year!

How will USD/CAD react to today’s headlines? Let’s check the 1-hour chart for clues!

Before moving on, ICYMI, yesterday’s watchlist looked at AUD/USD’s descending channel pattern ahead of a U.S. session with not data release scheduled. Be sure to check out if it’s still a good play!

And now for the headlines that rocked the markets in the last trading sessions:

Fresh Market Headlines & Economic Data:

U.S. construction spending in November: 0.4% m/m (0.6% m/m forecast, 1.2% m/m previous)

Japan’s markets out on bank holiday

Spain’s unemployment change in December: -27.4K (-15.7K forecast, -24.6K previous)

Switzerland’s manufacturing PMI for December: 43.0 as expected (42.1 previous)

The number of unemployed in Germany eased from 21K to 5K in November (vs. 19K expected)

Price Action News

Overlay of JPY vs. Major Currencies

Overlay of JPY vs. Major Currencies Chart by TradingView

With the Japanese markets still out on bank holiday, it was easier for JPY traders to continue pricing in the negative economic impact of the recent 7.6 magnitude earthquake in Japan.

It also didn’t help the safe haven that risk-taking in the forex space slightly improved today after yesterday’s risk-averse trading environment.

JPY is trading the weakest against GBP and NZD while it’s logging the least losses against CHF and AUD.

Upcoming Potential Catalysts on the Economic Calendar:

U.S. ISM manufacturing PMI at 3:00 pm GMTU.S. JOLTS job openings at 3:00 pm GMTFOMC meeting minutes at 7:00 pm GMTJapan’s final manufacturing PMI at 12:30 am GMT (Jan 4)China’s Caixin services PMI at 1:45 pm GMT (Jan 4)

Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action!  ️

USD/CAD 15-min Forex

USD/CAD 15-min Forex Chart by TV

I spy with my eye a potential breakout in the making! In case you weren’t looking at commodity-related currencies, you should know that USD started the year strong against CAD.

And why not? Aside from traders taking a chill pill on their Fed interest rate cut bets, the oil-related Canadian dollar is also taking hits from global growth concerns and escalating geopolitical tensions in the Middle East.

USD/CAD, which started the year near 1.3230, is now 100 pips higher and is testing what looks like the top of an ascending triangle pattern in the 15-minute time frame.

How will the pair react to today’s U.S. data releases?

The U.S. manufacturing PMI and JOLTS jobs reports are expected to print better results compared to the previous month, which could either draw in USD bulls or reinforce Fed interest rate cut bets. The Week Ahead post also hinted that we may see more deets on the Fed’s interest rate cut plans for 2024.

If today’s releases emphasize Uncle Sam’s strong(ish) economic recovery, then USD may draw in more buyers and USD/CAD may extend its 2024 upswing.

A strong upside technical breakout may put the R1 (1.3360) Pivot Point line and previous inflection point on USD/CAD bulls’ radar. And, if we get a fresh USD-friendly fundamental catalyst, we may even see enough momentum to hit the R2 (1.3400) psychological area.

USD/CAD may also break its consolidation to the downside, of course, but unless we see a fundamental catalyst that could inspire a sustained downswing, USD/CAD may have slightly higher odds of extending its current upswing.

What do you think? Will USD/CAD see an upside breakout today? Or is the pair due for a pullback?

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