October 5th Chart of the Week: Global Liquidity, FOMC Minutes, and USD/CAD Technical Analysis

Regional public holidays¹ across APAC and North America threaten to thin FX market liquidity, potentially expanding bid-ask spreads, and elevating localized volatility risks.

Slowing NFP growth and lower-than-expected inflation data prompt market participants to discount past FOMC hawkishness¹, shifting October rate-hike odds down to 20.5%².

USD/CAD holds a bullish bias above key moving averages, though upcoming Canadian labor data and RSI divergence near 1.4294 resistance call for caution.

Between October 4 and October 12, liquidity in global currency markets may face notable regional contractions due to key public holidays¹ in Asia and North America. In APAC, China observes its Golden Week holiday through October 7, while South Korea, Taiwan, and Japan mark regional closures, muting trading volumes across Asian hours. Liquidity bottlenecks shift to North America on Monday, October 12, when the United States observes Columbus Day/Indigenous Peoples’ Day and Canada celebrates Thanksgiving. While currencies technically trade 24 hours a day as other countries remain open, the closure of U.S. bond markets and commercial banks on October 12 will probably drain liquidity during the New York session. Thin trading conditions often amplify bid-ask spreads and heighten sensitivity to sudden market news, increasing the likelihood of localized price volatility and potential slippage.

Although markets are experiencing some closures, traders may attempt to take advantage of any favorable entries ahead of next week’s U.S. inflation reports, the consumer price index (US CPI), and the producer price index (US PPI). The economic calendar leaves us with USD/CAD as the currency pair for this week¹.

Please check the economic calendar for news releases in your local time.

Although the upcoming FOMC meeting minutes will detail the hawkish sentiment behind the September 16, 2026, decision to raise rates by 25 basis points, market participants are likely to look past this backward-looking tone due to crucial economic data released in the interim. Because the September meeting predated both the updated PCE figures - which revealed lower year-over-year inflation³ under a revised methodology - and a softer NFP report showing slowing hiring and rising unemployment⁴, investors are increasingly positioning for the Fed to pause its tightening cycle. According to the CME Fedwatch tool, expectations for a rate hike at the October 28th, 2026, FOMC meeting dropped significantly from 70% to 20.5%.

Consequently, traders may largely discount the outdated hawkish commentary and maintain a strictly data-dependent approach, keeping their focus squarely on the upcoming CPI and PPI reports to determine the central bank’s next policy move.

Market participants and Bank of Canada policymakers are focusing on Statistics Canada’s upcoming Labor Force Survey to evaluate whether the domestic employment market can bounce back from August’s sharp downturn. Following a solid summer expansion in July that added 75,100 jobs, the economy unexpectedly shed 41,700 positions in August, primarily within full-time employment, public administration, and support services⁵.

Although a shrinking total labor force prevented a rise in the unemployment rate, keeping it steady at 6.4%, annual wage growth slowed to 2.0%, highlighting persistent softness in the labor market⁵. Bloomberg’s economic calendar indicates that market consensus expects a 9K gain in jobs¹. This upcoming release could be critical in assessing whether August’s decline was merely a temporary pause or the start of a broader economic slowdown fueled by persistent trade uncertainties.

• After breaking below an ascending channel(February 2025), which began in September 2024, price action traded within a narrowing formation, as marked by the red lines on the chart.
  
• In June 2026, Price action broke above the upper border of the narrowing formation, reaching a high of 1.4250, where it was met by resistance, then retraced (Throwback) along the breakout extension to lows near 1.3760.
  
• Following an upward gap and a brief pullback, price action moved higher again, breaking above its peak and reaching its weekly R1 of 1.4294, where it met resistance, then fell back to the 1.4250 area, where it is currently trading.
  
• The latest upside move took the price action above the fast EMA9, intermediate SMA 50, its long-term SMA 200, the monthly PP of 1.4076, and the weekly PP of 1.4218.
  
• Pending today’s close price, a potential negative divergence could be in play between the RSI and price action, with price action making a higher high and RSI making a lower high.

Abbreviation list:

EMA: Exponential moving average

SMA: Simple moving average

RSI: Relative strength index

% K: Fast stochastic

%D: Slow stochastic

MACD: Moving average convergence divergence

Pivot point: PP

Support: S

Resistance: R

Footnotes

¹https://www.bloomberg.com/markets/economic-calendar

_²https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

³https://www.bea.gov/news/2026/personal-income-and-outlays-august-2026

⁴https://www.bls.gov/news.release/empsit.t17.htm

⁵https://www150.statcan.gc.ca/n1/daily-quotidien/260904/dq260904a-eng.htm