Primary Events For The U.S. Overnight: USD/CAD Outlook

Seemingly every hour there is fresh news breaking from the Congressional testimony of new U.S. Federal Reserve (FED) Chairman Jerome Powell. Citing a “strong personal outlook” for the U.S. economy, Powell stated that 4 rate hikes are possible for 2018. Investors quickly responded, with the CME Fedwatch tool assigning a 39.1% chance of a December 2018 rate hike.

The USD has fared well today amid Powell’s testimony. Directional moves against the Euro, Australian Dollar, British pound, and Canadian dollar have led the bullish action in the Greenback. This could be the beginning of an intermediate-term bull trend for the USD ahead of the March 21 FOMC meeting.

Economic Events

The economic calendar for the next 24 hours is full of primary currency market movers:

Country                         Event

Japan                            Retail Trade (Jan.)

U.K.                               GFK Consumer Confidence (Feb.)

China                             Manufacturing PMI (Feb.)

Switzerland                  UBS Consumption Indicator (Feb.)

Germany                       Unemployment (Feb.)

Eurozone                      CPI (Feb.)

U.S.                                GDP (Q4), Powell Testimony

This is a jam-packed U.S. overnight session. Volatility will be on display following the Eurozone CPI and U.S. GDP numbers. The Eurozone CPI is projected to fall to 1.2% and U.S. GDP is expected to come in around 2.5%. If there are any big surprises, look for a trending EUR/USD.

In addition, Jerome Powell will continue his testimony during tomorrow’s U.S. forex session. If the action is anything like today, we will see even more turbulence across the capital markets.

USD/CAD Technicals

The USD/CAD has been dominated by bids throughout the trading day. With the coming API and EIA crude oil inventory reporting cycle, we may witness shifting sentiment toward the Loonie.

Price is currently stalling out near a key area of topside resistance outlined in last Friday’s weekend preview. Depending upon the session high at this afternoon’s forex close, we may have a double-top formation to work with from 1.2757 to 1.2761. If this scenario develops, a bullish breakout may be in the cards above the double-top for Wednesday’s session.

Overview: The coming crude oil inventories cycle and economic calendar will play a huge role in USD/CAD valuations for the rest of the week. While a breakout above the 38% retracement of 2017’s range (1.2722) is possible, fundamentals are going to trump technicals for the time being.

If you are holding open positions through the U.S. overnight, use caution. With such a full economic calendar, any number of scenarios are possible.