The USD/CAD has been on a tear today, rallying more than 40 pips through the half-way point of the U.S. session. With about 24 hours left to go before Wednesday’s all-important FED meeting, sentiment is mixed toward the Greenback. At this point, currency traders appear content to settle into a holding pattern ahead of Jerome Powell’s commentary scheduled for 2:30 PM EST Wednesday. 

On the U.S. economic news front, there wasn’t a whole lot on today’s docket. The big news was a 1.4% year-over-year increase in Pending Home Sales for September. The figure came in at 3.9%, well above expectations of 1.4%. If nothing else, this is a sign that dovish FED policy is promoting mortgage lending and home buying.

While today’s calendar was dull, tomorrow’s is jam-packed. During the pre-market hours, U.S. Q3 GDP is due out. Analysts expect the figure to fall to 1.7% from 2.0%, a symptom of a broader economic slowdown. In addition, crude oil inventories are to be released, with figures expected to show growing supply. To top the day off, the FED Interest Rate Decision and FOMC Press Conference are due out at 2:00 and 2:30 PM EST. Rates are widely expected to be cut by ¼ point.

If you are trading the USD/CAD, then be aware that the Bank of Canada (BoC) Rate Statement is also due out at 10:00 AM EST Wednesday. Given the abundance of economic news on the calendar for the next 24+ hours, risk management is going to be key for anyone trading the Loonie.

USD/CAD Rallies From 1.3050

A significant rebound is underway in the USD/CAD. Bidders are pushing a return to the 1.3100 handle, a level not traded since last Thursday.

Here are the key levels to watch as we roll into Wednesday’s super-charged news cycle: 

• Resistance(1): Daily SMA, 1.3133
• Support(1): Psyche Level, 1.3050
• Support(2): Psyche Level, 1.3000

Bottom Line: In the event we see the USD/CAD fall from current levels, a buying opportunity may set up from just above 1.3000. Until elected, I will have buy orders in the queue from 1.3009. With an initial stop at 1.2944, this trade produces 50 pips on a slightly sub-1:1 risk vs reward management plan.