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Range Bound Pairs:

GBPUSD
USDCAD
EURNZD

GBP/USD

Event Risk UK and US

Trading Tip – While GBPUSD has held in a fairly wide 400-600 point range over the past few months, price has been contained to trade choppily in a more muted 200 point range. Resistance at the 1.9700 level has held quite nicely, though the candle wicks have extended as high as 1.9720, while support has gradually shifted lower and may not hold as solidly. As a result, entries on a bounce from resistance may be more reliable than taking trades on a rejection from the bottom of the range. Furthermore, the Bank of England’s interest rate decision could spark major volatility no matter what their decision, as a flood of relief selling may occur even if they maintain a steady hand.

UK – British data for the coming week will be a mixed bag in terms of relevancy for economists and policy makers. The flow begins on Monday with the PMI manufacturing survey for March. Typically this indicator receives limited attention and it may do so again this time around. Though the PMI is a timely report, Thursday’s industrial production read for February offers a more concrete figure as it uses cold-hard statistics rather than ambiguously answered questions like the survey. Consequently, the manufacturing report is expected to slip in March on a pick up in energy prices, though the cold February weather isn’t expected to have held down production activity the month before. Filling in the gap Wednesday, the Nationwide consumer confidence survey will give a read into the vital consumer sector, though the stable GfK report released earlier will set the tone for the release. Finally, the BoE will convene on Thursday and is expected to deliver no change on rates.

US – The US economic calendar holds a few indicators that have the potential to put the US dollar in motion. The key reports for the week come interestingly enough on the first and last day of the week. Monday holds the ISM manufacturing survey - one of the top market moving reports from the US. In the most recent reading, the market’s official consensus was for a modest contraction to 51.1, but considerable disappointments in a number of the regional reports may foretell a lower number. Later in the week, Tuesday’s pending home sales indicator and Wednesday’s ISM services number may encourage a modest boost in volatility. However, pending sales is considered lagging to the earlier released existing and new home reports. At the same time, though services represent some three quarters of the GDP, its survey will likely not garner the same level of interest its manufacturing equivalent should. Finally, caution should be taken around Friday’s NFPs. Forecasts call for a 130,000 print, but expectations can and do change quickly.

USD/CAD (Update)

Event Risk US and Canada

Trading Tip – USDCAD has managed to hold within a downtrending channel, with price currently sitting just above the supporting line. A long entry from this level is contingent on an hourly close above 1.1555, as price has been hovering in the same region for some time and the pair trends to drop precipitously. Furthermore, the recent moves make tight stops necessary. Another daily close below 1.5555 may indicate a change in trend and will subsequently negate this trade. Traders should also look towards oil prices, as the recent jump above $68/bbl amidst geopolitical risk in Iran has lent the Canadian dollar a boost. Thus, a peaceful resolution to the situation could send crude spiraling lower and USDCAD higher.

US – The US economic calendar holds a few indicators that have the potential to put the US dollar in motion. The key reports for the week come interestingly enough on the first and last day of the week. Monday holds the ISM manufacturing survey - one of the top market moving reports from the US. In the most recent reading, the market’s official consensus was for a modest contraction to 51.1, but considerable disappointments in a number of the regional reports may foretell a lower number. Later in the week, Tuesday’s pending home sales indicator and Wednesday’s ISM services number may encourage a modest boost in volatility. However, pending sales is considered lagging to the earlier released existing and new home reports. At the same time, though services represent some three quarters of the GDP, its survey will likely not garner the same level of interest its manufacturing equivalent should. Finally, caution should be taken around Friday’s NFPs. Forecasts call for a 130,000 print, but expectations can and do change quickly.

Canada – Event risk from the Canadian calendar is concentrated into a two-day period next week. The first report to hit the wires will be Wednesday’s February building permits. This indicator will be watched very closely – especially by the perpetual loonie bears. The reason for the negative bias is the big drop in housing starts previously reported for the same month.  Should permits head lower, policy makers may soon grow concerned over consumer sentiment and spending habits, which have buffered the economy as exports have faltered. Wrapping things up early on Thursday, employment and Ivey PMI will offer glimpses into two very different sectors of the economy. Scheduled for release first thing in the morning, the labor data is expected to release a modest release. However, the payrolls report is often subject to considerable divergences from the market’s official consensus. Depending on how the employment report hits the wires, the Ivey report could be completely ignored after a big labor-driven run or hold its own.

Trading Tip – In the past few months, EURNZD has seen considerable trends that have tallied over 1000 points. Now working on a triple bottom, the chance of another wave higher is increasingly dependent on the popularity of the carry trade. To garner some idea of when trends are developing and how big they may get, the yen crosses should be monitored. In terms of behavior, EURNZD can move fast, so stops should be strictly observed. Also, since daily bars can easily measure over 200 points on big moves, the stops should be followed on smaller time frames so as not to caught up in momentum.

Euro Zone – There is more than enough action on the European calendars, though nearly every one of the higher level indicators are notorious for being inconsistent market-movers. The week starts off with Germany’s manufacturing purchasing managers’ index for March. Though the report is considered a more time indicator among the typical docket, it rarely raises market-moving interest from traders. Over the following two days, Euro Zone factory inflation and retail sales will headline the European hours. However, both indicators are recording activity from February and regional data has further prepared the market for the probable outcomes. Finally, on Thursday, Germany factory activity for February will hold the greatest potential for fundamental and price action. Though a lagging report, it measures the health of the factory sector in Europe’s largest economy. Should it initiate a sizable surprise, a considerable move would not be difficult to muster.

New Zealand – New Zealand’s calendar is almost absolutely barren for the week ahead. The only indicator to even cross the wires is ANZ’s commodity price index for March. As there are no estimates for the report, some post-data reaction may come of the print; but it will likely be small. Instead, the New Zealand dollar will find most of its momentum from the carry trade factor. Should another wave of risk aversion arise, the buoyed, high-yielding currencies will likely sell off as investors move their capital into depressed Japanese yen or safe haven Swiss francs.