There are traditional range opportunities in some of the majors (like EURUSD and GBP for example); but the lack of profit potential and the terminal patterns these pairs are developing suggest breakouts are a real risk. Instead, I am looking for the relatively quiet conditions for the broader market to temper AUDCAD’s aggressive momentum.

Trading Tip – There are traditional range opportunities in some of the majors (like EURUSD and GBP for example); but the lack of profit potential and the terminal patterns these pairs are developing suggest breakouts are a real risk. Instead, I am looking for the relatively quiet conditions for the broader market to temper AUDCAD’s aggressive momentum. This pair is still mired in a steep, bearish pitch; but the drive behind this move is circumspect and obvious technical levels are offering reason for a stall and reversal. This is certainly a much more speculative proposal than usual; so I will need to approach with caution. Our strategy has entry that is now above spot; which in effect requires something of a reversal to trigger entry. Furthermore, the stop is set wide enough to cover the zone of support along with the general rising trend with a buffer for false breakouts. The initial objective is set within an average daily range; but the second target looks to recoup risk and capture profit on a large rebound. Since this position is already setting up, we will cancel any open orders in 24 hours.

Event Risk for Australia and Canada

Australian – The Australian dollar is first and foremost tied to its sentiment. Relatively strong growth, a high benchmark lending rate and heavy exposure to commodities makes this a speculative favorite. For general risk appetite, no gauge is better to reflect investor optimism than equities. Though the market is more congestive than trending; the general bias has clearly taken a disappointing shift. For specific event risk, the Aussie docket doesn’t really threaten price volatility until next week. The NAB business confidence figures are noteworthy; but they have shown little in the way of market movement in the past. Along similar lines the Westpac Leading Index is too lagging and inaccurate to benchmark a 2Q GDP number that is a long ways off. After the weekend, 2Q inflation and RBA minutes however will give us direct insight into interest rate forecasts.
   
Canada – Canada is the fundamental black sheep of the majors. The economy has avoided the worst of the economic recession with relatively strong domestic demand and healthy exports. What’s more, the local impact of the global financial crisis has been surprisingly limited. However, unlike its Australian counterpart, the Canadian economy has fallen into recession. With clear ties to the health of the US, there is a clear anchor on the performance of the world’s eighth largest economy. This is the reason for the dour forecasts from policy officials; but the favorable comparisons to the nation’s largest trade partner keeps speculation on an even keel. However, these are long-term considerations. Through the short-term, shifts in market sentiment will likely be responsible for most swells in volatility outside of general market tides. From scheduled event risk, there is notable data ahead; but its cumulative market moving impact is doubtful. This week sees manufacturing shipments for May and CPI for June. The former lags the physical trade report and the later is a practice in policy-based economics. The top release is next week’s BoC; but even that is not expected to develop any surprises.