Source: PaxForex Premium Analytics Portal, Fundamental Insight
The Preliminary US S&P Global Manufacturing PMI for February is predicted at 47.1, the Preliminary US S&P Global Services PMI at 47.1, and the Preliminary US S&P Global Composite PMI at 47.5. Forex traders can compare this to the US S&P Global Manufacturing PMI for January, reported at 46.9, the US S&P Global Services PMI at 46.8, and the US S&P Global Composite PMI at 46.8.
US Existing Home Sales for January are predicted to increase by 2.0% monthly to 4.10M. Forex traders can compare this to US Existing Home Sales for December, which decreased by 1.5% monthly to 4.02M.
The Canadian CPI for January is predicted to rise by 0.7% monthly and by 6.1% annualized. Forex traders can compare this to the Canadian CPI for December, which contracted by 0.6% monthly and rose by 6.3% annualized. The Canadian Core CPI for January is predicted to rise 0.2% monthly and 5.5% annualized. Forex traders can compare this to the Canadian Core CPI for December, which dropped by 0.3% monthly and expanded by 5.4% annualized.
Canadian Retail Sales for December are predicted to rise by 0.4% monthly, and Canadian Core Retail Sales to decrease by 0.3% monthly. Forex traders can compare this to Canadian Retail Sales for November, which contracted by 0.1% monthly, and Canadian Core Retail Sales, which dropped by 0.6% monthly.
Traders will receive February PMI reports throughout the trading session, where expectations call for sub-50 readings, indicative of contraction. While the labor market remains tight, other economic indicators hint at an ongoing slowdown. Several US banks noted that a consumer slowdown appears imminent, with consumer debt and overall debt at all-time highs as interest rates continue to rise amid high inflation. Traders should remain cautious with bullish positions in the US Dollar, as the US economy prints conflicting signs, and caution is the best strategy until more data emerges.
The forecast for the USD/CAD turned bearish after this currency pair advanced into its descending Ichimoku Kinko Hyo Cloud. Short-term volatility could rise as the Kijun-sen and the Tenkan-sen flatlined. Traders should also monitor the CCI after it has moved into extreme overbought territory. A breakdown below 100 could trigger the next leg lower, while a contraction below zero may result in an accelerated sell-off. Can bears overpower bulls to force the USD/CAD into its horizontal support area? Subscribe to the PaxForex Daily Fundamental Analysis and earn over 5,000 pips per month.
Should price action for the USD/CAD remain inside the or breakdown below the 1.3465 to 1.3515 zone, PaxForex recommends the following trade set-up:
- Time frame: D1
- Recommendation: Short position
- Entry Level: Short Position @ 1.3490
- Take Profit Zone: 1.3260 – 1.3310
- Stop Loss Level: 1.3570
Alternative scenario:
Should price action for the USD/CAD breakout above 1.3515, PaxForex recommends the following trade set-up:
- Time frame: D1
- Recommendation: Long Position
- Entry Level: Long Position @ 1.3570
- Take Profit Zone: 1.3660 – 1.3710
- Stop Loss Level: 1.3515
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