February 28th 2020.
Today’s income and spending data out of the US is expected to move the US Dollar. Economists expect a solid increase in both. The Chicago PMI will also be eagerly awaited with economists calling for another sub-50 reading, indicating a contraction in the sector. The USDCAD is pressuring its horizontal resistance area to the upside, how will price action react following the release of today’s data? Subscribe to the PaxForex Daily Fundamental Analysis and grow your balance trade-by-trade.
Canada’s GDP report may not have a significant impact unless it delivers a surprise reading to either the upside or downside. Should it meet expectations, the Bank of Canada will receive more economic evidence to remain on the sidelines. The USDCAD will receive its directional guidance from its base currency and not its quote currency. Will bears force a reversal in this currency pair or can bulls power ahead? Today’s fundamental analysis will take a look at the upside potential as well as the downside risk in this currency pair.
Here are the key factors to keep in mind today for US Dollar trades:
- US Advanced Goods Trade Balance: The US Advanced Goods Trade Balance for January is predicted at -$68.1B. Forex traders can compare this to the US Advanced Goods Trade Balance for December, which was reported at -$68.3B.
- US Personal Income and Personal Spending: US Personal Income for January is predicted to increase by 0.4% monthly, and Personal Spending is predicted to increase by 0.3% monthly. Forex traders can compare this to Personal Income for December, which increased by 0.2% monthly and to Personal Spending, which increased by 0.3% monthly. Real Personal Spending for January is predicted to increase by 0.2% monthly. Forex traders can compare this to Real Personal Spending for December, which increased by 0.1% monthly. The PCE Deflator for January is predicted to increase by 0.2% monthly and by 1.8% annualized. Forex traders can compare this to the PCE Deflator for December, which increased by 0.3% monthly and by 1.6% annualized. The PCE Core Deflator for January is predicted to increase by 0.2% monthly and by 1.7% annualized. Forex traders can compare this to the PCE Core Deflator for December, which increased by 0.2% monthly and by 1.6% annualized.
- US Wholesale Inventories: US Final Wholesale Inventories for January are predicted flat at 0.0% monthly. Forex traders can compare this to US Wholesale Inventories for December, which decreased by 0.2% monthly.
- US Chicago PMI: The US Chicago PMI for February is predicted at 46.0. Forex traders can compare this to the US Chicago PMI for January, which was reported at 42.9.
- US Michigan Consumer Sentiment: Final US Michigan Consumer Sentiment for February is predicted at 100.7. Forex traders can compare this to previous US Michigan Consumer Confidence for February, which was reported at 100.9. Final Current Conditions for February are predicted at 114.0 and Final Expectations are predicted at 92.6. Forex traders can compare this to previous Current Conditions for February, which were reported at 113.9 and to Expectations, which were reported at 92.6.
Here is the key factor to keep in mind today for Canadian Dollar trades:
- Canadian GDP: The Canadian GDP for December is predicted to increase by 0.1% monthly. Forex traders can compare this to the Canadian GDP for November, which increased by 0.1% monthly. The Canadian GDP for the fourth-quarter is predicted to increase by 0.3% quarterly and by 1.6% annualized. Forex traders can compare this to the Canadian GDP for the third quarter, which increased by 1.6% quarterly and by 1.5% annualized.
Should price action for the USDCAD remain inside the or breakdown below the 1.3400 to 1.3490 zone the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Short Position
- Entry Level: Short Position @ 1.3450
- Take Profit Zone: 1.3100 – 1.3150
- Stop Loss Level: 1.3525
Should price action for the USDCAD breakout above 1.3490 the following trade set-up is recommended:
- Timeframe: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.3525
- Take Profit Zone: 1.3600 – 1.3665
- Stop Loss Level: 1.3490
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