Waiting on the trade balance for Canada, eh? Well, at 8:30 EST we’ll get Canadian capacity utilization, import and export figures and the trade balance. The consensus is expecting an improvement on all counts. And though imports and exports are expected to pretty much offset each other, the gains from the prior period are expected to favor exports.
I say that because the Canadian dollar is so far little changed from when markets opened up in Asia overnight. And we’ve gotten through the markets opening up in Europe, too, without much change.
This tight, sideways trading inherently builds up momentum that typically lends itself to sharp breakouts, to the upside or downside. But to add to the pent up energy, USDCAD is trading right along its pivot (p).
That is, it’s hugging a major level that can motivate a substantial price move. And on top of that, the range between pivot support (s) and pivot resistance (r) levels (calculated based on the pivot) are very tight. A tight pivot range tends to mean a powerful, wide-ranged day.
Though we haven’t seen any action yet ...
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Some of the subsequent move will depend upon the risk appetite feel in the market when the data is released soon. But the Canadian dollar has been rather strong, relative to other major currencies:
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A number in-line with or better than expected may spark a move toward strength that comes to an end quickly on the view that the Canadian dollar is already over-extended (due to the view that Canada’s economy will fare better as the US makes its way back toward more normal levels of growth.)
But, the Canadian dollar is butting its head at major weekly resistance for the second time. If there doesn’t appear to be any real appetite for risk, and if trade balance numbers come in worse-than-expected, then it’s a pretty good better that the Canadian dollar gets hit hard today.
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