European Open: FTSE aims for a 5th bullish week, USD/CAD in focus

Asian Indices:

Australia's ASX 200 index rose by 33.4 points (0.45%) and currently trades at 7,476.20
Japan's Nikkei 225 index has risen by 87.06 points (0.25%) and currently trades at 34,583.57
Hong Kong's Hang Seng index has fallen by -124.54 points (-0.57%) and currently trades at 21,684.44
China's A50 Index has risen by 33.08 points (0.24%) and currently trades at 13,884.16

UK and Europe:

UK's FTSE 100 futures are currently up 50 points (0.67%), the cash market is currently estimated to open at 7,601.81
Euro STOXX 50 futures are currently up 32 points (0.86%), the cash market is currently estimated to open at 3,834.01
Germany's DAX futures are currently up 96 points (0.68%), the cash market is currently estimated to open at 14,174.15

US Futures:

DJI futures are currently down -10 points (-0.03%)
S&P 500 futures are currently up 2 points (0.01%)
Nasdaq 100 futures are currently down -2 points (-0.04%)

FTSE: Market Internals

If the FTSE were to close around 7550 today it will form a small bearish pinbar on the weekly chart. It would also be its fifth consecutive bullish week, and its first such occurrence this year. Yet the FTSE has not exceeded five bullish weeks since May 2018, so the odds of a rally next week appear low from a technical perspective. Especially since volatility into these highs has been the lowest over the past five week as bulls lose steam.

FTSE 100 trading guide

FTSE 350: 4230.52 (-0.45%), 08 April 2022

16 stocks rose to a new 52-week high, 7 fell to new lows
89 (25.36%) stocks advanced, 250 (71.23%) stocks declined

Outperformers:

+13.77% - Hochschild Mining PLC (HOCM.L)
+5.16% - BAE Systems PLC (BAES.L)
+4.72% - Capricorn Energy PLC (CNE.L)

Underperformers:

-42.6% - Ferrexpo PLC (FXPO.L)
-37.8% - Polymetal International PLC (POLYP.L)
-30.4% - EVRAZ plc (EVRE.L)

Canada’s employment report in focus at 13:30 BST Canadian employment currently sits at 5.5% which is its lowest level since June 2019. Yet it if meets expectations and drops to 5.4%, it will be its lowest level in at least 48 years. Expectations for another bumper employment change are low as the consensus sits around 80k, which is a far cry from the 336.6k it printed in February. Still, now concerns of nuclear war have (thankfully) subsided compared to this time a month ago, another strong report could tip the scale back towards a 50-bps hike from the BOC (Bank of Canada) this month.

USD/CAD hovers beneath resistance ahead of CA employment

Whilst volatility for currency and commodity markets was low overnight, we saw an extension of yesterday’s moves. This means the dollar is trading higher (and euro lower) for a seventh day. We highlighted a potential bull flag on GBP/AUD in today’s Asian Open report, and a similar setup is forming on GBP/CAD, although we’d need to see a break above the 1.6473 high to invalidate a bearish channel and confirm a flag.

On Tuesday we highlighted the potential for USD/CAD to mean revert on the daily chart and it has not disappointed, rising for two consecutive days and reaching out upper bullish target. We can see on the four-hour chart that prices are consolidating near the highs as the monthly pivot point, weekly R1 and 200-bar eMA provide resistance.

As markets already pricing in a 50-bps hike from the BOC this month then a surprisingly soft employment report for Canada could see the pair break convincingly higher (and may also provide the more volatile move). Yet if the employment report comes in stronger than expected, USD/CAD could pull back from these highs. And that makes the 1.2580 – 1.2610 region a pivotal level to watch.

Further out, given the rebound from 1.24 following its strong bullish pinbar on Tuesday, we may see this one break higher eventually, regardless of today’s outcome.

Up Next (Times in BST)

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