USDCAD Trade Ideas as Canadian Trade Balance and NFP Loom

Summary:
• With the Canadian Trade Balance set for release at the same time as the NFP, what would be the possible trade ideas for this pair?

The USDCAD will be in focus today at 12.30GMT as the Canadian Trade Balance is released. The expectation is for a deficit of $300,000 to be registered, which is a huge drop from the $800,000 surplus recorded previously. The USD/CAD pair has been trading upwards for most of the week on the back of the rate cut by the Fed and weakening commodity prices brought on by renewed US sanctions on China.

Crude oil prices fell on Thursday by more than 7%, which helped push the USDCAD nearer to 6 week highs. The pair is now on the way to targeting a retest of the 1.3245 R1 pivot resistance, already tested twice in the last 24 hours. The 4-hour chart shows the pair’s successful completion of a short term falling wedge and traders now await the NFP report as well, scheduled for release at the same time as the Canadian Trade Balance.

USDCAD Possible Trade Plays

Traders would be looking for two scenarios:

1. Good NFP report (higher than expected employment change + lower or static unemployment rate) and a lower than expected Canadian trade balance figure with a reasonable deviation. This should be good for a USDCAD long trade which may take pair beyond the R1 pivot and possibly target the R2 pivot at 1.3280 in the near term.
2. A bad NFP report (lower than expected employment change + higher or static unemployment rate) and a higher than expected Canadian trade balance figure with a reasonable deviation. This would lead to a USDCAD short trade opportunity, targeting the S1 pivot at 1.3179.

Anything other than the situations painted above would not be tradable, and traders would then wait for the effect of the news to wear off before turning to the technical setups for guidance.Don’t miss a beat! Follow us on Twitter.