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European allies have "lost hope of the United States remaining in NATO"; the situation may be beyond repair.1. Monday: ① Data: US March ISM Non-Manufacturing PMI; US March Global Supply Chain Stress Index. ② Holiday: Germany, Australia, France, Spain, New Zealand, Italy, UK, Shanghai and Shenzhen Stock Exchanges and Beijing Stock Exchanges, domestic futures exchanges, Hong Kong Stock Exchange closed for one day, northbound and southbound trading closed, Taiwan Stock Exchange closed for one day. 2. Tuesday: ① Data: France, Germany, Eurozone, UK March Services PMI final readings; Eurozone April Sentix Investor Confidence Index; US March New York Fed 1-year Inflation Expectations; China March Foreign Exchange Reserves. ② Events: US President Trump holds a joint press conference with the military in the Oval Office; a new round of price adjustments for domestic refined oil products will begin. ③ Holiday: Hong Kong Stock Exchange closed for one day, northbound and southbound trading closed. 3. Wednesday: ① Data: US API and EIA crude oil inventories for the week ending April 3; Japans February trade balance; New Zealands Reserve Bank of New Zealand interest rate decision for the week ending April 8; UKs March Halifax seasonally adjusted house price index (MoM); Frances February trade balance; Switzerlands March seasonally adjusted unemployment rate; Eurozones February PPI (MoM); Eurozones February retail sales (MoM). ② Events: EIA releases its monthly Short-Term Energy Outlook report; Chicago Fed President Goolsby, a 2027 FOMC voting member, speaks on monetary policy; Reserve Bank of New Zealand announces its interest rate decision; Reserve Bank of New Zealand Governor Brehman holds a monetary policy press conference. 4. Thursday: ① Data: US 10-year Treasury auction (ending April 8); German February seasonally adjusted industrial production (month-on-month); German February seasonally adjusted trade balance; US initial jobless claims for the week ending April 4; US February core PCE price index (year-on-year); US February personal spending (month-on-month); US Q4 final annualized GDP growth rate; US Q4 final real personal consumption expenditure growth rate; US Q4 final annualized core PCE price index (month-on-month); US February core PCE price index (month-on-month); US February wholesale sales (month-on-month); US EIA natural gas storage for the week ending April 3. ② Events: Federal Reserve releases monetary policy meeting minutes; Swiss National Bank President Schlegel delivers a speech. 5. Friday: ① Data: Chinas March CPI year-on-year rate; Germanys final March CPI month-on-month rate; Switzerlands March consumer confidence index; Canadas March employment change; US March unadjusted CPI year-on-year rate, seasonally adjusted CPI month-on-month rate, seasonally adjusted core CPI month-on-month rate, and unadjusted core CPI year-on-year rate; US April one-year inflation rate expectations (preliminary); US April University of Michigan consumer sentiment index (preliminary); US February factory orders month-on-month rate; Chinas March M2 money supply year-on-year rate (pending). 6. Saturday: ① Data: US total number of oil rigs for the week ending April 10.The Jordanian military said it shot down two missiles and two drones launched by Iran into the country’s airspace in the past 24 hours.On April 6th, US President Trump stated in an interview on April 5th that the US is currently engaged in "in-depth negotiations" with Iran and hopes to reach an agreement before his April 7th deadline. Two sources indicated that the negotiations are being conducted through mediators from Pakistan, Egypt, and Turkey, and there has also been communication between Trumps advisors and the Iranian Foreign Minister. Trump stated that his special envoy, Witkov, and his son-in-law, Kushner, are conducting intensive negotiations with the Iranian side. Trump said that an agreement is very likely, but if an agreement cannot be reached, he will destroy everything there. Previously, Trump had threatened to destroy infrastructure vital to Iranian civilians if an agreement could not be reached with Iranian leaders.On April 6, Iranian Foreign Minister Araqchi stated during a phone call with Russian Foreign Minister Lavrov that the US threat to attack Iranian energy facilities was Washingtons "admission" of war crimes. In a statement, Iran said, "The Iranian Foreign Minister mentioned the US threat to attack Iranian energy facilities, considering these remarks a clear admission of war crimes." Araqchi pointed out that since the start of the war, the US has been attacking Irans industrial, energy, educational, medical, and nuclear infrastructure. He emphasized that the UN Security Council and the International Atomic Energy Agency should immediately condemn the US attacks on Iranian facilities.

On the back of broad-based USD strength, USD/CAD approaches the mid-1.3700s, approaching a two-week high

Alina Haynes

Nov 03, 2022 18:04

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On Thursday, the USD/CAD pair recovers from an early decline to the 1.3680 zone and enters positive territory for the sixth consecutive trading day. During the beginning of the European session, spot prices achieve a one-and-a-half-week high towards the middle of the 1,3700s and appear poised to extend the recent rally from levels below 1,3500.

 

The underlying bullish sentiment surrounding the US dollar, bolstered by the Federal Reserve's more hawkish stance, appears to be a key factor sustaining the USD/CAD exchange rate. For the fourth consecutive time, the US central bank increased interest rates by 75 basis points to combat persistently rising inflation. In addition, Jerome Powell, the chairman of the Federal Reserve, dashed expectations for a dovish reversal by suggesting that interest rates would need to rise more than anticipated.

 

A further increase in US Treasury bond yields increases the prospect of further Fed policy tightening and continues to act as a tailwind for the currency. In addition, a lessening of risk sentiment provides additional support for the safe-haven dollar. A modest decrease in crude oil prices from their three-week high is anticipated to weaken the Canadian dollar, which is related to commodities prices. This, in turn, increases the chance of a further USD/CAD rise in the near future.

 

Even from a technical standpoint, the overnight spike following the FOMC meeting has pushed spot prices over the barrier zone of 1.3670-1.3685. A subsequent strength and acceptance over the 1.3700 level reinforces the bullish bias and favors bullish traders, indicating that the path of least resistance for the USD/CAD pair is to the upside. In conjunction with US bond yields, the US ISM Services PMI will propel the US usd and add momentum to the primary currency.