EUR/USD 1.17181
0.369%
Gold 4631.45
1.937%
Oil 100.810
-4.320%
USD/JPY 156.083
-2.716%
GBP/USD 1.35336
0.431%
GBP/JPY 211.240
-2.294%
Browse More
  • English
  • 简体中文
  • 繁體中文
  • Tiếng Việt
  • ไทย
  • Indonesia
Subscribe
Real-time News
On April 30th, Madison Faller, Global Investment Strategist at JPMorgan Private Bank, stated that the Bank of Englands decision to hold rates steady today was not surprising, but investors should not confuse consensus with confidence. The market may have misinterpreted the balance of risks. Risk is two-way. However, the speed and volatility of the repricing from rate cuts to rate hikes suggest that investors are overestimating the inflationary risks from the energy shock while underestimating the downside risks to growth. We believe that recent movements in UK government bonds (especially in the short to mid-yield curve) and the pound have been somewhat overdone. We believe investors should position themselves now, rather than chasing a hawkish narrative.On April 30th, David Rees, Global Head of Economics at Schroders, stated that the Bank of Englands decision to keep interest rates unchanged reflects its hawkish stance. With overall inflation at 3.3%, wage growth has only gradually slowed, and services inflation remains sticky. The risk lies in the possibility that this shock could become more persistent. A second wave of risk exists later this year if energy shortages translate into food price pressures. Rising fuel and shipping costs, coupled with renewed pressure on inputs such as fertilizers, could lagged behind in pushing up grocery inflation. The risk of persistently high inflation, coupled with speculation about political upheaval following local elections, has pushed UK gilt yields to near 20-year highs. Even so, the threshold for raising interest rates remains high. Given some slack in the labor market and the potential for weaker growth if supply disruptions persist, we doubt the Bank of England will tighten policy unless economic activity remains strong enough to absorb the impact of a rate hike.On April 30th, the Bank of England voted 8-1 to keep the benchmark interest rate at 3.75%. Chief Economist Peale was the only member to vote against it, but other members hinted they might join him at future meetings. Due to the high unpredictability of the Iranian conflict, the Bank of England abandoned its core inflation forecast, instead setting three scenarios based on different paths of energy prices and the effects of a second round of inflation. All three scenarios indicated a need for an interest rate hike: the most pessimistic scenario predicted oil prices would remain around $130 per barrel—a level already reached before Thursdays rate decision. Under this scenario, models used to illustrate the potential impact of monetary policy pointed to a larger rate hike, between 66 and 151 basis points.Bank of England Governor Bailey will hold a monetary policy press conference in ten minutes.Daxin Securities: Raises its target price for Amazon (AMZN.O) from $285 to $310.

As investors wait for US/Canada employment data, the USD/CAD trading range is limited to 40 pips

Daniel Rogers

Apr 06, 2023 13:36

 USD:CAD.png

 

The USD/CAD pair retraced below 1.3450 in the early Asian session as the US Dollar Index (DXY) lost upside momentum after reaching the key resistance level of 102.00. As investors anticipate the release of the United States/Canada Employment data, the Canadian dollar is expected to deliver a dazzling performance.

 

As a consequence of a decline in Job Openings and sluggish additions of new positions, as measured by Automatic Data Processing, firms have slackened recruitment efforts, thereby alleviating the tight US labor market. (ADP). This has led to expectations that the Federal Reserve (Fed) will keep interest rates unchanged at its May meeting.

 

In the interim, S&P500 futures have resumed their downward trend, indicating a cautious market sentiment.

 

Employment data will influence the Canadian Dollar. The consensus estimate for Net Change in Employment is 12K, which is a decrease from the previous release of 21.8K. The estimated unemployment rate is 5.1%, up from 5.0% previously.

 

The USD/CAD exchange rate is exhibiting an Inverted Flag pattern on an hourly time frame. The Inverted Flag is a trend-following pattern that consists of a protracted consolidation followed by a decline. Participants prefer to enter an auction after a bearish bias has been established, and current vendors increase their position size during the consolidation phase of a chart pattern.

 

The Canadian dollar was unable to maintain a position above the 50-period Exponential Moving Average (EMA) at 1.3458, indicating that further declines are imminent.

 

Meanwhile, the Relative Strength Index (RSI) (14) has an upper limit of 60.00. A violation of the unfavorable 20.00-40.00 range will trigger downward momentum.

 

A break below the low of April 04, 1.3406, would expose the asset to a fresh six-week low around 1.3350, the low of February 6 followed by round-number support at 1.3300.

 

In an alternative scenario, a move above the psychological resistance of 1.3500 would lend momentum to US Dollar supporters, propelling the asset toward the 31- and 29-March highs of 1.3559 and 1.3619, respectively.


Suggestion