Triple Whammy for USD/CAD Tomorrow

Three big events, three big chances for volatility in USD/CAD tomorrow.


Thursday could be an extremely volatile day for the USD/CAD.  Tomorrow, Canada releases the Employment Change for March, which is expected to be -350,000 vs +30,300 in February.  As with the US Nonfarm payrolls last week, Canada is expecting a large drop in employment due to the coronavirus. Recall in the US last week, that while  -100,000 jobs were expected, the actual number was -701,000.  We could see a similar miss in Canada’s data.  However, as with the US, the worst of it will most likely be seen in April’s data as opposed to March’s data. 

In addition, the same time Canada’s employment data is due, the US will be releasing Initial Claims for the week ending April 4th.  The expectation is only for 5,250,000 new jobless claims vs 6,648,000 the prior week.  That followed the 3,283,000 from the week ending March 21st.  Hopefully the number will be near the estimate, or at the very least, under last weeks!  These 2 events could add significant volatility to the USD/CAD.

If that weren’t enough, OPEC+ is planning a virtual meeting tomorrow to discuss oil production cuts.  Given that Canada is an oil exporting led economy, decisions made will likely affect the value of the Canadian Dollar.  Earlier today, the Algerian minister suggested that there will be a massive reduction in production, which could reach 10 million barrels per day.  As a result, WTI Crude is up 7.5% today while USD/CAD sold off 50 pips after the announcement.

USD/CAD is currently in a large symmetrical triangle dating back to March 12th.  Price has recently pulled back to the 38.2% Fibonacci retracement level from the low on December 31st, 2019 to the highs on March 19th, near 1.4010.  The pair is consolidating at that level which is also near the apex of the symmetrical triangle.

Source:  Tradingview, City Index

On a 240-minute timeframe, USD/CAD is holding just under horizontal resistance near 1.4075.  Trendline resistance on the daily is above there near 1.4200, and horizontal resistance once again near 1.4375.  Support is at the 50% retracement level of the previously mentioned timeframe near 1.3809, the 61.8% Fibonacci retracement at 1.3604, and finally the gap-fill from the weekend reopen on March 9th near 1.3436.

Source:  Tradingview, City Index

Three big events, three big chances for volatility in USD/CAD tomorrow.  However, be on the lookout  for comments overnight ahead of the OPEC meeting, which could set off some fireworks!

Build your confidence risk free

More from Forex

Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.