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JPMorgan Chase raised its price target for Alphabet, Googles parent company, from $340 to $385.December 12th - Investec Chief Economist Philip Shaw stated in a report that the UK economy is likely to contract in the fourth quarter unless there is a significant boost in economic growth by the end of the year. "If economic momentum does not substantially pick up by the end of the year, the UK economy will record its first quarterly contraction in two years," Shaw said.December 12th - Japans auto workers union will seek a slightly higher wage increase than last year in the upcoming round of wage negotiations, and the Bank of Japan is closely monitoring wage trends in this industry impacted by US tariffs. The Japan Auto Workers Union (JAW) released a draft negotiation plan on Friday, to be reached in March next year, proposing a minimum monthly basic wage increase target of 12,000 yen. The previous year, the union did not set 12,000 yen as a minimum target, but rather used it as a target to strive for, ultimately achieving a 9,520 yen increase, equivalent to a 3.58% rise. If JAW achieves its current target, it will exceed this years actual results, indicating that even with the industry facing pressure from higher US tariffs, workers intend to continue pressuring employers. This further strengthens the Bank of Japans incentive to raise interest rates. Automakers typically announce their wage plans in February, setting the tone for broader spring wage negotiations.Data shows that after Ukraine submitted a revised proposal to the United States to end the conflict with Russia, Ukrainian international bonds rose by 0.9 to 1.8 cents, with the purchase price of bonds maturing in 2029 reaching 73 cents, the highest level since February.He Lifeng: We must go all out to promote high-quality development, continue to implement the moderately loose monetary policy, strengthen financial support for key areas such as expanding domestic demand, technological innovation, and small and micro enterprises, steadily and orderly advance financial reform and opening up, and do a good job in expectation management.

USD/CAD Remains in Resistance Territory in the Absence of a Catalyst

Daniel Rogers

Apr 29, 2022 09:49

At the time of writing, the USD/CAD currency pair was trading at 1.2805 and consolidating in resistance territory. The US dollar strengthened against the majority of the G10 currencies before easing somewhat near the close of the day, providing some comfort to the commodity complex. Nonetheless, DXY, a measure of the dollar's value relative to a basket of currencies, hit a two-decade high as investors priced in a succession of relatively low interest rates from the Federal Reserve.

 

A rebound in risk appetite occurred throughout the Wall Street session, as investors noticed evidence of robust consumer demand hidden by the unexpected decline in Gross Domestic Product growth for the last quarter, the first decline in GDP growth since 2020. Nonetheless, the risk-off tone is firmly established, as evidenced by the S&P 500's more than 5% decline in April, which is on track to be the worst month since 1987's bear market.

 

Concerns over China's war against COVID, combined with the Ukraine crisis and hawkish central banks intent on tightening monetary policy, are fueling recession fears. Treasury Secretary Janet Yellen came out overnight, stating that the global pandemic and Russia's invasion of Ukraine demonstrate the possibility of future large economic shocks, adding that downturns are "expected to continue to stress the economy."

 

Meanwhile, the price of crude oil has increased to USD107/bbl, bolstering the CAD, despite the growing likelihood of a European ban on Russian oil. "Germany is considering a gradual suspension of Russian oil imports, which would result in a broader sanction by the area. Germany's minister has already stated that the country can survive without Russian oil," according to analysts at ANZ Bank.

 

"Investors are anxious about compensating for the barrels lost as a result of the impending European sanctions. Oil product prices are also increasing, which helps refiners' profitability. However, demand for oil products remains sluggish in China as the number of COVID cases continues to rise."

All Eyes on the Federal Reserve

All eyes will now be on the Federal Reserve meeting next week. Expectations of the Fed tightening are high. Markets anticipate at least a 50 basis point increase at the May 3-4 meeting and another at the June 14-15 meeting. This is fully priced in, with over 25% odds of a June 75 basis point shift. The shock will come if anything falls short of or exceeds this consensus at next week's summit.

 

"Looking ahead, the swaps market is pricing in 275 basis points of tightening over the next 12 months, implying a policy rate at 3.25 percent. While this comes close to meeting our own target of a 3.5 percent terminal rate, we continue to see risks that the predicted terminal rate will move even higher if inflation proves to be even more resistant than expected," Brown Brothers Harriman analysts wrote.

USD/CAD Technical Evaluation

According to the following analysis, USD/CAD is consolidating in resistance zone and may be on the verge of a big correction towards 1.2720/50:

 

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