GBPUSD reaches its highest level due to the US fiscal stimulus
GBPUSD expanded its gains in the European market, achieved the fourth consecutive daily rising, these…
The Bank of Canada will release the overnight rate on Wednesday afternoon, at GMT 2:00 p.m. The overnight rate is the interest rate that banks and other financial institutes in Canada use to lend and borrow funds among themselves.
Forex traders consider the overnight interest rate to be the paramount factor in the valuation of the Canadian Dollar against other major currencies. In fact, it is often stated that CFD traders analyze all other fundamental data just to predict the future interest rate decision. Hence, any major change in the overnight interest rate may create large price swings on Wednesday.
Last month, the Bank of Canada kept its overnight rate at 0.25%. Analysts are expecting the BOC to keep the rate at 0.25%.
On Wednesday, at GMT 3:00 p.m., the US National Association of Realtors released the pending home sales number. It is an annualized number of residential buildings that are under contract to be sold but still awaiting the closing transaction during the last month in the country. This figure also includes the number of new buildings.
The sale of pending homes usually has a widespread positive ripple effect in the local economy. So, collectively this figure acts as an excellent leading indicator of the overall economic health. Therefore, Forex traders consider the pending home sales number to be important data as it tends to have a considerable market impact.
Last month, the US pending home sales figure went up by 8.1%. The forecast for this month is currently set at a 0.4% increase.
The USD/CAD remained bearish since September 20, 2021. Over the last month, it fell by 4.73% or 615 pips. Last week, it fell to 1.2288 and started a bullish retracement. So far, the pivot zone near 1.2336 level seems to be providing ample support to the USD/CAD.
The Canadian central bank will likely keep the overnight rate to 0.25%. On the other hand, the US pending home sales rate will likely go down from 8.1% to 0.4% over the last month. We believe it would set a bearish fundamental outlook for the USD/CAD this week. Therefore, if the USD/CAD closes below the support near 1.2336, it would likely attract additional bearish momentum in the market.
Hence, CFD traders should look out for trading opportunities below this major support level around 1.2336.
Market Analyst / Trading Consultant . Asif worked as a prop trader for almost a decade, and later he managed trading operations for one of the largest foreign exchange strategy developers in Europe. Currently, he works as a trading consultant to several brokers and writes about various tech and financial topics. You can reach him at firstname.lastname@example.org
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