GBP/CAD just got rejected from a previous resistance area!
Is the pair ready for a short-term reversal?
Before moving on, ICYMI, yesterday’s watchlist looked at USD/CAD’s short-term range ahead of the FOMC statement. 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:
S&P Global Canada Manufacturing PMI for October: 48.6 vs. 47.5 previous; Survey signaled a noticeable jump in the cost inflation; staffing volumes dropped in October
U.S. ISM Manufacturing PMI for October: 46.7 (49.5 forecast; 49.0 previous); Prices Index rose to 45.1 vs. 43.8; Employment Index fell to 46.8 from 51.2
JOLTs Job Openings for September: 9.55M (9.2M forecast; 9.5M previous)
ADP Private Payrolls report for October: 113K (65K forecast; 89K previous)
EIA Crude Oil Inventory Change: 770K vs. 1.37M previous
On Wednesday, the FOMC unanimously voted to hold the key federal funds rate in a target range between 5.25%-5.50%
BOC Governor Macklem said that the BOC’s neutral rate likely “is higher than lower” and admitted that he “wasn’t totally comfortable” leaving the nominal neutral rate estimates unchanged between 2% to 3% in April
Japan’s monetary base jumped 9.0% y/y in October (5.6% y/y expected and previous)
Australia’s goods trade surplus fell from 10.16B AUD to a 30-month low of 6.79B AUD in September as imports (+7.5%) outpaced exports (-1.4%)
Switzerland’s inflation was higher by 0.1% as expected in October (-0.1% previous)
Price Action News
Overlay of USD vs. Major Currencies Chart by TradingView
Falling U.S. 10-year bond yields and less hawkish-than-expected FOMC statements dragged the U.S. dollar lower against its major counterparts.
There were no other major catalysts to rock the markets so the anti-USD sentiment carried over to the Asian session before steadying during the early London session trading.
USD is currently weakest against NZD, AUD, and JPY while clocking in the least losses against GBP and CAD.
Upcoming Potential Catalysts on the Economic Calendar:
Italy’s manufacturing PMI at 8:45 am GMT
France’s final manufacturing PMI at 8:50 am GMT
Germany’s final manufacturing PMI at 8:55 am GMT
Germany’s unemployment change at 8:55 am GMT
Eurozone’s final manufacturing PMI at 9:00 am GMT
U.S. Challenger job cuts at 11:30 am GMT
BOE’s policy decision at 12:00 pm GMT
BOE Gov. Bailey to give a speech at 12:30 pm GMT
U.S. initial jobless claims at 12:30 pm GMT
U.S. preliminary nonfarm productivity at 12:30 pm GMT
U.S. factory orders at 2:00 pm GMT
SNB Chairman Jordan to give a speech at 5:00 pm GMT
Use our new Currency Heat Map to quickly see a visual overview of the forex market’s price action! 🔥 🗺️
GBP/CAD 15-min Forex Chart by TradingView
I don’t know if you noticed but GBP/CAD from the 1.6865 levels earlier today. As you can see, the area lines up with this week’s resistance zone as well as a retest of a broken trend line support in the 15-minute time frame.
Does this mean GBP/CAD is ready for a bearish reversal?
Up ahead, the Bank of England (BOE) is expected to keep its benchmark rates steady at 5.25% for a third meeting in a row. The number of BOE members who vote for a rate hike or a pause may factor in GBP’s short-term price direction.
Traders will also pay close attention to the central bank’s newest projections. Lower growth and inflation forecasts may extend GBP’s weakness as they encourage “peak rate” speculations for the BOE.
Let’s see how GBP/CAD reacts to today’s BOE event and overall market themes.
Less hawkish bets for the BOE or oil (and CAD)-friendly headlines may drag GBP/CAD to the S1 (1.6790) Pivot Point line near the 1.6800 psychological area. We may even see a retest of the 1.6775 area of interest if there’s enough bearish momentum!
On the other hand, surprisingly hawkish or optimistic BOE statements may keep GBP/CAD within its 60-pip range.
Look out for bullish candlesticks near the 1.6825 inflection point for a possible trip back to the 1.6860 range resistance if not the R1 (1.6880) trend line and Pivot Point line.
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