Chart of the day - USDCAD (08.03.2023)

USDCAD is one of the pairs that will be on watch this afternoon. There is a number of events scheduled that could move the pair. ADP employment report for February at 1:15 pm GMT will be the first one of these and it will also be the final hint ahead of Friday's NFP report. ADP release will be followed by trade balance data for January from US and Canada at 1:15 pm GMT. However, the biggest USDCAD volatility today is expected around 3:00 pm GMT when Powell holds the second day of his semi-annual testimonies and Bank of Canada announces rate decision.

United States

• 1:15 pm GMT - ADP report for February

• 1:30 pm GMT - Trade balance for January

• 3:00 pm GMT - Powell testifies before House Financial Services Committee

Canada

• 1:30 pm GMT - Trade balance for February

• 3:00 pm GMT - Bank of Canada rate decision

While speech from Powell and BoC rate decision are key events of the day, traders should keep in mind that there is also risk that they will turn out to be non-events. Powell will deliver the same speech as he did yesterday and the only thing that may differ are questions from lawmakers. Meanwhile, the Bank of Canada is expected to live up to its pledge of pausing rate hike cycle and leave rate unchanged at a meeting today.

Taking a look at USDCAD chart at H4 interval, we can see that the pair has been trading in an upward channel recently. The pair reached the highest level since early-November 2022 but the upward move slowed today as investors seem to be in wait-and-see mode ahead of USDCAD volatility events later in the day. As Powell is unlikely to make any major statements we have not heard during the first day of testimonies, surprise from Bank of Canada could be a massive volatility trigger. However, BoC has been quite clear about a plan to pause rate hike and failing to do so could have a negative impact on its credibility. Not to mention that situation in the Canadian economy did not change too much from the previous meeting.

Source: xStation5