Though we have an open EURCAD trade through an earlier recommendation, the suggested USDCAD long would help to offset the Canadian dollar exposure. For nearly a month, the pair has carved out a well-defined rising trend channel. While the levels are mature and perhaps overly obvious, USDCAD is prone to long periods of congestion after sharp breakouts or big trends.
[B]Trading Tip[/B] - Though we have an open EURCAD trade through an earlier recommendation, the suggested USDCAD long would help to offset the Canadian dollar exposure. For nearly a month, the pair has carved out a well-defined rising trend channel. While the levels are mature and perhaps overly obvious, USDCAD is prone to long periods of congestion after sharp breakouts or big trends. The recommended long entry is above the trend channel; but given its pitch and the addition of a Fibonacci level and 100-bar SMA in the area, it has a strong probability of holding up. The stop is sufficiently wide to the downside to help confirm a breakdown of the trend, which would conclude our interest in this range anyway. For the secondary suggestion of shorting on resistance, the rising channel could make an entry difficult since spot may continually test the line and, in doing so, draw the suggested stop closer. Since this range is on the move, if the trade does not trigger within by Wednesday, the levels should be scraped and reevaluated.
[B]Event Risk US and Canada[/B]
[B]US[/B] - After finding its direction from exogenous event risk for nearly a week, the economic calendar will finally take the dollar?s helm. The week ahead is fully stocked with well-known indicators, though their impact on the market this time around is in question. Monday and Tuesday?s docket are crowded with housing numbers. Existing and new home sales are both expected to contract in the month of May. However, a contraction in the leading new sales report is expected after the surge in the previous month. Also pitching in is the S&P/CS Composite which measures inflation in the sector. Altogether though, the market seems to have numbed itself to the disappointing evolution of US housing data. The consumer sector, on the other hand, has grown in prominence as economists and policy makers monitor the health and ability of domestic demand to support growth. The Conference Board?s sentiment gauge on Tuesday and Friday?s spending and income numbers should provide an encompassing view of average American. Amid all numerous themes in the data, there are two stand outs. Durable goods orders for May is expected to report a strong rebound, which would line up with the turn in inventories and pick up in factory activity other indicators have suggested. The FOMC rate decision will harbor the greatest potential for event risk, but neither the market nor analysts give little backing to a rate shift or even a change in sentiment.
[B]Canada[/B] - The Canadian economic calendar is rather sparse. Next week will begin rather late with Industrial Product and Raw Materials price indices. Though there is building interest underlying an eventual rate hike from the Bank of Canada, these indicators will not likely usher in a 4.50 percent benchmark rate on its own - even if it is a blow out number. On the other hand, the monthly GDP number for April certainly holds a level of importance for the market. Should the economy hold its steady bearing, it would certainly pad the outlook for the economy and an interest rate hike. If the number prints below expectations of a repeat 0.3 percent pick up, it would place a far greater weight on the Canadian dollar than the inflation data did.
[B] Data for June 25 - August 2 Data for June 25 - August 2
Date US Economic Data Date Canadian Economic Data[/B]
Jun 25 Existing Home Sales (MAY) Jun 28 Industrial Product Price (MAY)
Jun 26 New Home Sales (MAY) Jun 28 Raw Materials Price Index (MAY)
Jun 27 Durable Goods Orders (MAY) Jun 29 Gross Domestic Product (MoM) (APR)
Jun 28 FOMC Rate Decision
Jun 29 Personal Spending (MAY)