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On September 18th, NBC reported, citing seven current and former U.S. and Western officials, that the Pentagon is assessing a significant reduction in U.S. military deployments in Europe, potentially withdrawing approximately 25,000 troops, roughly one-third of the current U.S. troop presence in the region. The proposed reduction could even extend to a maximum of 40,000 troops. If implemented, this would be the largest adjustment to the U.S. military presence in Europe since the end of the Cold War. Currently, the U.S. has approximately 80,000 troops stationed in Europe, primarily in Germany, Italy, and Spain. The report states that the Pentagon launched a six-month review of its European troop presence in June. European Command Commander Alex Greenkiewicz is expected to submit the assessment to Defense Secretary Hergsays soon, with plans potentially involving reductions in air and naval personnel, ground troops, or adjustments to troop deployment locations. Pentagon officials stated that the review aims to ensure U.S. military deployments align with the "America First" strategy. Some European countries and U.S. lawmakers have expressed concern about the large-scale withdrawal, arguing that it could weaken NATOs deterrent capabilities. Supporters, however, believe the U.S. should reallocate its overseas military resources, assigning more regional defense responsibilities to Europe. The relevant plan has not yet been finalized, and any withdrawal is expected to proceed after the final recommendation is submitted to the president for approval.According to NBC News, the Pentagon is considering withdrawing nearly a third of its U.S. troops from Europe.OpenAI launches a new AI model for law firms.The Dow Jones Industrial Average rose 316.14 points, or 0.61%, to close at 51,778.04 on Thursday, September 17; the S&P 500 rose 85.91 points, or 1.14%, to close at 7,637.72; and the Nasdaq Composite rose 439.87 points, or 1.69%, to close at 26,418.30.On September 18, voting began in the Kamchatka Krai and Chukotka Autonomous Oblast for the election of Russias ninth State Duma (lower house of parliament) at 8:00 a.m. local time. This is the first nationwide parliamentary election held in Russia since the special military operation against Ukraine in 2022.

Canadian Dollar Outlook: CAD Extends Rally After Yesterday’s BoC Decision

Cory Russell

Apr 15, 2022 10:55

USD/CAD FUNDAMENTAL BACKDROP

The USD/CAD exchange rate began lower this morning as a result of lower US Treasury rates (a lower expectation for US inflation) and a weaker dollar. The Bank of Canada's (BoC) 50 basis point rate boost yesterday spurred a CAD surge, clawing back recent losses. In the long run, though, I prefer the dollar because I don't believe the Canadian economy can keep up with the Fed's aggressive policy. As we go through the rightening cycle, the dollar should strengthen versus the loonie.


Crude oil prices are still high, but their impact on the USD/CAD has lessened since the US is now a net crude oil producer. This can be seen in the USD/CAD price movement, where the CAD has been relatively quiet in comparison to prior crude oil price increases.


We have a couple option expiries for the New York cut later today (see details below). As the cut approaches, prices on huge expiries tend to approach the strike price. USD/CAD is now slightly higher than the below strikes, suggesting a move down later in the day.


1.2550 (289M) USD/CAD, 1.2560-70 USD/CAD (923M)


USD/CAD ECONOMIC CALENDAR As we move into the Easter weekend, retail sales and consumer confidence in the United States will round off the week, while Canadian inflation will take center stage next week.

TECHNICAL ANALYSIS

USD/CAD seems to be headed for a retest of the psychological support level of 1.2500, which is part of a building bear flag. This gloomy prognosis is definitely plausible in the short term, but as I have said, USD upside is my favored strategy after Q2.

IG CLIENT SENTIMENT DATA: MIXED

Retail traders are now significantly LONG on USD/CAD, according to IGCS, with 62 percent of traders holding long bets (as of this writing).