Two trades to watch: FTSE, USD/CAD

FTSE rises after GDP beats forecasts. USDCAD looks to Canadian jobs data.

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FTSE rises after GDP beats forecasts

The FTSE, along with its European peers, are, pushing higher on Friday after steep losses again yesterday.

The FTSE is outperforming its peers after more robust than forecast GDP data. UK GDP grew 0.8% MoM in January, after contracting -0.2 in December. Expectations had been for growth of 0.2%.

Growth was broad-based across sectors. However, growth is likely to slow on the fallout from the Ukraine crisis.

Russia, Ukraine concerns remain after peace talks failed yesterday. The West is considering further sanctions on Russia.

Where next for FTSE?

The FTSE rebounded from the 6760 low at the start of the week, pushing back above 7000. However, the rebound failed to retake the 200 SMA, and now trades are caught between the 200 SMA and 7000. The RSI suggests that there could be more downside on the cards.

In which case, sellers would be looking for a break below 7000 to target the 6810-6760 zone. Meanwhile, buyers will look for a move over the 200 sma at 7225 to open the door to 7400 on November 12.


FTSE chart

USD/CAD looks to Canadian jobs data

USDCAD fell in the previous session despite US inflation rising to a new 4-decade high and despite oil prices dropping a further 2.5%.

US inflation rose to 7.9% in February, up from 7.5% in January, confirming a rate hike next week.

Oil prices have continued o fall away from the 14 year high of $130 hit at the start of the week and trade around $107 as the market tries to reconcile what the US Russian oil ban means for the market and where extra supply could come from to plug the gap.

Attention will turn to Canadian jobs data, which is expected to improve, with unemployment falling to 6.2% from 6.5%. 160k jobs are expected to be added. Wage growth slipped back to 2.4% YoY last.

A strong jobs report could convince of a BoC rate hike in April and send USD/CAD lower.

Where next for USD/CAD?

The USDCAD pullback from the 2022 high of 1.29 stalled around 1.2750 yesterday. The RSI is relatively neutral.

1.2750 now acts as the immediate support level, which needs to be decisively broken down to open the door to 1.27 round number, on the way to 1.2680 the 50 sma and 1.2650, a level which has offered strong support across most of the year. A break below here would expose the 200 sma at 1.2580.

On the upside, buyers will look for a move over 1.28 in order to push towards 1.2875, the February 24 high, and on to 1.29, the 2022 high.


USDCAD chart




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