That’s right, it’s all going to happen in one day! The most important of these three events is definitely the OPEC meeting in Vienna where OPEC members, as well as some non-OPEC members, will try to agree on an oil production cut. The Canadian dollar is highly correlated to the oil price, and the oil price will definitely be largely affected by this extremely important meeting which will play itself out in Austria tomorrow.
Arch-rivals Iran and Saudi Arabia will not cooperate easily, and there is considerable friction between the two nations at the moment. It would take a lot of negotiating to get these two countries to agree upon acceptable lower production volumes.
West Texas Intermediate (WTI Oil) traded lower on Tuesday and lost about $1.50. The USD/CAD didn’t trade significantly higher, however. Broad US dollar weakness provided a soft landing for the Canadian dollar when the better than expected US preliminary GDP number failed to attract meaningful bids to the Buck. Neither did the fantastic CB Consumer confidence number which was released 90 minutes later, help the US dollar.
USD/CAD Daily Chart
The pair is really struggling at the moment. It doesn’t look like it’s going break higher soon. Of course, this could all change in the wink of an eye, especially with the OPEC meeting tomorrow.
When we look at the technicals of the USD/CAD, it seems like the negative divergence I’ve been mentioning for a few days already is coming to fruition. Perhaps a relatively deep correction is on the way. I don’t think a trend reversal is likely, however, even if OPEC manages to secure an oil deal. An oil production cut would probably strengthen the Canadian dollar considerably, but the question is whether the oil price (and the Canadian dollar) will be able to preserve those gains.
At the moment the likelihood of an oil deal seems like a long shot. The oil price could soon trade towards the $30 mark if oil negotiations fail to produce good results. This would be the ideal situation for USD/CAD traders. The pair could resume its bull trend, and offer buying opportunities to trend following market players.
The Canadian GDP numbers will be released tomorrow at 13:30 GMT. This is a very important release to keep an eye on if you’re trading the Canadian dollar. Another factor which could affect the oil price and the Canadian dollar tomorrow is the US crude oil inventories numbers which will be released at 15:30 GMT.
USD/CHF Daily Chart
The USD/CHF has run into some resistance in the last few days. Gauging by the last two trading days’ topside wicks, it seems like the pair could perhaps return to the 20-day exponential moving average soon. This could potentially be a good area to open new long positions.
A few weeks ago, I mentioned that I expected some range-bound market conditions on this pair. This has been the case, and for the last couple of weeks, the pair has neither broken higher nor fallen lower. Look at the following chart:
GBP/USD Daily Chart
Traders who possess the necessary skill can possibly make some profits by playing the range on the GBP/USD. The hourly chart may be the preferred timeframe for picking entries for this purpose.
The BOE Financial Stability Report will be released at 07:00 GMT tomorrow. This could move the GBP/USD, so keep an eye on this.
Other news events
German unemployment numbers – 08:55 GMT
Eurozone preliminary CPI numbers – 10:00 GMT
ECB President Draghi Speaks – 12:30 GMT
US ADP Nonfarm Employment Change – 13:15 GMT
US Pending Home sales – 15:00 GMT
FOMC Member Powell Speaks – 16:45 GMT
FOMC Member Mester Speaks – 17:35 GMT
US Beige Book – 19:00 GMT