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DAX falls after China trade data, German industrial production. USD/CAD treas water ahead of the BoC rate decision.

DAX is falling for a third straight session as investors digest the latest trade data from China and slightly better-than-expected German industrial production figures.

China saw exports drop 8.7% YoY in November, down from 0.3% as global demand slowed. Meanwhile, imports dropped 10.6% YoY, down from 0.7%. The weak trade data is being offset in part, by the news that China is easing Covid restrictions and math testing.

German industrial production slipped 0.1% MoM in October, better than oh .5% decline forecast. the data comes after German factory orders unexpectedly increased in October, raising hopes that a recession in the eurozone's largest economy could be milder than initially feared.

Looking ahead, eurozone GDP figures are due. This is the third Q3 GDP reading and is expected to confirm 0.2% growth.
 

Where next for the DAX?

The DAX has eased back from the six-month high of just below 14600 and trades in a holding pattern capped on the upside by 14600 and on the lower side by 14140, the November 15 low. The RSI remains over 50 and the 50 sma is set to cross above the 200 sma in a golden cross bullish signal.

Buyers will look for a rise over 14600 to bring 14700 the June high, into focus, ahead of 15000, the key psychological level.

Sellers could look for a fall below 14140 to bring 13800, the August high into focus. A break below here exposes the 200 sma at 13565.

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BoC rate decision

USD/CAD is holding steady after four straight days of gains as the BoC interest rate decision falls into focus.

The BoC is expected to raise interest rates by 50 basis points. However, the market is also pricing in a 27% likelihood 25 basis points hike. Should the BoC hike rates by 50 basis points, this would take the benchmark rate to 4.25%.

Investors will be looking out for comments regarding the terminal rate. While some believe that 4.25% could be the terminal rate, with GDP and the jobs market still strong, and inflation at 6.9%, the BoC may continue raising rates further.

Meanwhile, the USD has risen in recent sessions supported by stronger-than-forecast data fueling bets that the Federal Reserve will need to continue raising rates aggressively.
 

Where next USD/CAD?

USD/CAD is testing the trendline resistance dating back to mid-March after rebounding from a weekly low of 1.3385. The RSI supports further upside as it remains above 50.

Buyers will look for a move over 1.3675, the weekly top, to advance towards 1.37, the round number, and 1.38, the November high.

On the downside, failure to break above the rising trendline could see sellers test the 50 sma support at 1.3750 ahead of 1.3500 the October low.

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