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On August 1st, Japans Ministry of Finance posted on the social media platform X that the Japanese monetary authorities have multiple tools at their disposal to meet market liquidity needs. These tools include, as appropriate, the use of the Federal Reserves Standing Repurchase Facility (FIMA), which accepts U.S. Treasury securities as collateral to provide temporary dollar liquidity. The Ministry of Finance stated, "We are prepared to utilize available tools as needed to support the orderly functioning of the market."August 1st - According to reports from the United States on July 31st, July this year is expected to be the hottest month on record in the continental United States. Meanwhile, a new "heat dome" is forming in the western United States, and the high temperatures are expected to continue. It is reported that as of July 29th, the average temperature in the United States this July was about 1.4 degrees Celsius higher than the average for the same period from 1991 to 2020. Although the final average temperature data for July will not be released until early August, media predictions suggest that this figure could break the record set in July 2012, making July this year the hottest month on record in the continental United States.Japans Ministry of Finance: Monetary authorities have a wide range of tools to address market liquidity needs.On August 1st, the South Korean National Assembly passed an amendment to the Criminal Procedure Act on July 31st, abolishing the prosecutors authority to conduct direct and supplementary investigations. This is another legislative measure in South Koreas push for reform of the prosecutorial system. The National Assembly passed the amendment with 175 votes in favor, 2 against, and 1 abstention. According to the amendment, the prosecutors office will no longer have the authority to conduct direct investigations, nor may it conduct supplementary investigations on its own. If a prosecutor believes a case requires further investigation, they can only request the judicial police to conduct supplementary investigations.August 1st - According to the Japan Meteorological Agency, a magnitude 5.8 earthquake struck off the coast of Aomori Prefecture, Japan, at approximately 11:48 AM local time today (August 1st). The maximum tremor was felt at intensity 4, and the epicenter was at a depth of 80 kilometers. There is no risk of a tsunami.

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.


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