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On July 30th, Federal Reserve Chairman Warsh stated that since the June meeting, financial markets have already priced in most of the effects of the Feds tightening policy, therefore he does not agree with describing the decision to maintain interest rates as a "pause." Warsh said, "I wouldnt call todays decision a pause in any sense. If you have to label it a pause, then the performance of the financial markets shows the opposite." Since the Feds mid-June policy meeting, the yields on both 2-year and 10-year U.S. Treasury bonds have risen by approximately 20 basis points. Warsh pointed out that during this period, financial markets did not "pause" their adjustments, but rather continuously repriced based on inflation data and economic growth performance: on the one hand, inflation data influenced market expectations; on the other hand, strong economic growth pushed both nominal and real interest rates higher. He stated, "Today, the Fed did not explicitly adjust the policy rate, thats true. But I think this is just the beginning of the whole policy story, not the end."Canadas Minister for Trade to the United States said he held comprehensive talks with U.S. Trade Representative Greer, and both sides agreed to maintain close contact.On July 30th, Federal Reserve Chairman Warsh told reporters that he does not believe there is a general "conflict" between the central banks dual mandate—maximum employment and price stability. "My judgment is that when we fulfill our mandate, we will achieve both goals simultaneously," Warsh said, adding that there is no either-or choice regarding inflation and employment. "Neither part of our mission has been forgotten," he said, noting that what is truly damaging the markets is the problem of high and volatile inflation.US President Trump: Federal Reserve Chairman Warsh has a council, and its a political council. Warsh wants to see lower interest rates.US President Trump: Federal Reserve Chairman Warsh is excellent.

European Open: FTSE Aims For a 5th Bullish Week, USD/CAD in Focus

Skylar Shaw

Apr 12, 2022 10:55

The ASX 200 index in Australia increased by 33.4 points (0.45 percent) to 7,476.20.


The Nikkei 225 index in Japan has gained 87.06 points (0.25 percent) and now trades at 34,583.57.


The Hang Seng index in Hong Kong has dropped -124.54 points (0.57%) and is now trading at 21,684.44.


The A50 Index in China has increased by 33.08 points (0.24 percent) to 13,884.16.


The FTSE 100 futures in the United Kingdom are now up 50 points (0.67 percent), with the cash market expected to start at 7,601.81.


Futures on the Euro STOXX 50 are now up 32 points (0.86 percent), with the cash market expected to start at 3,834.01.


The DAX futures in Germany are now up 96 points (0.68 percent), with the cash market expected to open at 14,174.


Futures in the United States: The DJI futures are now down -10 points (-0.03 percent )


Futures on the S&P 500 are now up 2 points (0.01 percent )


Futures for the Nasdaq 100 are now down -2 points (-0.04 percent )

Market Internals (FTSE)

On the weekly chart, if the FTSE closes around 7550 today, it will create a little bearish pinbar. It would also be the market's fifth straight positive week, and the first of the year. However, the FTSE hasn't had more than five positive weeks since May 2018, so the chances of a rebound next week are slim. Especially considering, as bulls lose speed, volatility into recent highs has been the lowest in the last five weeks.


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


16 stocks hit new 52-week highs, while 7 hit new lows.


89 (25.36 percent) equities rose, while 250 (71.23 percent) fell.


Outperformers:


Hochschild Mining PLC (HOCM.L) is up 13.77 percent, while BAE Systems PLC is up 5.16 percent (BAES.L)


Capricorn Energy PLC is up 4.72 percent (CNE.L)


Underperformers: Ferrexpo PLC (FXPO.L) -42.6 percent; Polymetal International PLC (POLYP.L) -37.8 percent; EVRAZ plc -30.4 percent (EVRE.L)

 

At 13:30 BST, the job situation in Canada will be discussed.


Employment in Canada is now at 5.5 percent, the lowest level since June 2019. Even yet, if it matches projections and falls to 5.4 percent, it would be the lowest it has been in at least 48 years.


Expectations for another big job gain are modest, with the consensus hovering around 80k, a long cry from the 336.6k it printed in February. Still, since that fears of nuclear war have (hopefully) diminished compared to a month ago, another solid report might tilt the scales back towards a BOC (Bank of Canada) rate rise this month.


Prior to the jobs report in Canada, the USD/CAD is hovering at resistance.


While currency and commodities market volatility remained minimal overnight, we observed a continuation of yesterday's developments. For the eighth day in a row, the dollar is higher (while the euro is down). In today's Asian Open report, we mentioned a probable bull flag on GBP/AUD, and a similar setup is emerging on GBP/CAD, albeit we'd need to see a break above the 1.6473 high to invalidate the bearish channel and confirm the flag.

 

The possibility for USD/CAD to mean reversion on the daily chart was highlighted on Tuesday, and it has not disappointed, climbing for two days in a row and hitting our top bullish objective. Prices are stabilizing at the highs on the four-hour chart, as the monthly pivot point, weekly R1, and 200-bar eMA offer resistance.


Given that markets are already pricing in a 50-bps raise from the Bank of Canada this month, a shockingly weak jobs data for Canada might see the pair break decisively higher (and may also provide the more volatile move). However, if the jobs data is greater than predicted, USD/CAD may retreat from its recent highs. As a result, the zone between 1.2580 and 1.2610 is crucial to monitor.


Regardless of today's conclusion, considering the recovery from 1.24 after its powerful bullish pinbar on Tuesday, we may see this one break higher in the future.

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