EUR/USD 1.16341
-0.215%
Gold 4507.58
0.663%
Oil 58.618
0.632%
USD/JPY 157.879
0.650%
GBP/USD 1.34060
-0.254%
GBP/JPY 211.655
0.407%
Browse More
  • English
  • 简体中文
  • 繁體中文
  • Tiếng Việt
  • ไทย
  • Indonesia
Subscribe
Real-time News
U.S. Secretary of State Marco Rubio: The United States supports the courageous Iranian people.On January 10th, a research report from Founder Securities stated that the December non-farm payroll data was mixed, with the US job market generally showing a mild downward trend, but the unemployment rate showed marginal improvement, giving the Federal Reserve more reason to wait and see in January. Combined with the Supreme Courts potential declaration that the IEEPA tariffs are unconstitutional, this may be a short-term positive for US stocks and the US dollar, but a negative for US Treasuries. Data on new jobs, job openings, and hourly wage growth indicate that the US job market remained relatively weak in December, but the marginal decline in the unemployment rate was one of the few bright spots. Looking at interest rate futures and US Treasuries, the market priced in a no-rate-cut by the Fed in January, with a possible rate cut as early as June. Meanwhile, the Supreme Courts potential declaration that the IEEPA tariffs are unconstitutional means that economic expectations may improve marginally, inflationary pressures may weaken, but the fiscal deficit may worsen. With the Fed in no hurry to cut rates and tariffs easing, US Treasuries face many unfavorable factors in the short term and are likely to remain at high levels. US stocks will benefit from the AI boom and reduced tariff disruptions, especially in sectors affected by tariffs such as consumer staples and industry, which are more resilient.January 10 - According to the UN Security Council schedule, the Security Council will hold an emergency meeting on the situation in Ukraine on January 12.On January 10th, Xiaomi Auto released a statement in response to netizens questions, stating that the new generation SU7 will be equipped with the Xiaomi Super Motor V6s Plus across the entire series. In addition to the motor being jointly supplied by United Electric and Inovance Technology, Xiaomi will also introduce its own self-developed and self-produced V6s Plus Super Motor in the future to further improve production efficiency and shorten delivery cycles.On January 10th, Chen Jianye, Secretary of the Party Leadership Group and Director of the Fujian Provincial Department of Industry and Information Technology, stated that the next step will be to accelerate the digital transformation of the manufacturing industry, enhance its green foundation, and promote the transformation of industries towards "new" and "green." This includes: Deepening the implementation of the "Nine Major Actions" for comprehensive digital empowerment of industrial manufacturing; adhering to the principle of enterprise-led development, strengthening government guidance, and leveraging the role of service providers to create more transformation benchmarks, promote chain-based transformation and overall transformation, and accelerate the large-scale application of digital technologies in the manufacturing industry; Deepening and expanding "Artificial Intelligence +"; making good use of the new round of incremental policies for artificial intelligence, supporting the cultivation of industry-specific models and intelligent agents, accelerating industry adaptation and scenario expansion, and promoting the empowerment of various industries by artificial intelligence; guiding the differentiated and characteristic development of the Fuzhou-Xiamen-Quanzhou provincial-level artificial intelligence industrial parks; and carrying out in-depth energy conservation and carbon reduction special actions; closely monitoring national carbon assessment requirements, and implementing energy conservation reviews and carbon emission assessments for "high energy consumption and high pollution" projects in the industrial sector; building Fujians green advantages in manufacturing, cultivating more national and provincial-level green parks and enterprises, and promoting the construction of a number of zero-carbon parks and factories.

The USD/CAD Exchange Rate Retreats from the 50-Day Simple Moving Average Ahead of the Bank of Canada's Rate Hike

Drake Hampton

Apr 13, 2022 09:49

Discussion Points Regarding the Canadian Dollar 

USD/CAD is struggling to maintain its early week gains as the US Consumer Price Index (CPI) update triggered a bearish reaction in the US Dollar, and the Bank of Canada's (BoC) interest rate decision may weigh on the exchange rate as the central bank is expected to deliver its third rate hike in 2022.

USD/CAD Rate Reaches 50-Day Simple Moving Average Ahead Of Boc Rate Hike

USD/CAD eases off a new weekly high (1.2662) as a smaller-than-expected increase in the core measure of US consumer prices reinforces the Federal Reserve's expectation that "firming monetary policy, combined with a gradual fading of supply–demand imbalances, would help to anchor longer-term inflation expectations and eventually bring inflation down."

 

As a result, the Federal Open Market Committee (FOMC) may seek to unload its holdings of Treasury securities, agency debt, and agency mortgage-backed securities later this year, and the BoC meeting may bring an end to the recent series of higher highs and lows in USD/CAD, as the central bank is expected to deliver another 50 basis point rate hike.

 

Simultaneously, the Bank of Canada may announce plans to wind down its balance sheet when Governor Tiff Macklem and Co. release their quarterly Monetary Policy Report (MPR), and any change in the central bank's exit strategy could trigger a larger pullback in USD/CAD as the exchange rate struggles to break above the 50-Day SMA (1.2660).

 

Nonetheless, expectations for a further shift in Fed policy may keep USD/CAD afloat ahead of the central bank's next interest rate decision on May 4, as Governor Lael Brainard has stated that the central bank could "reduce the balance sheet at a rapid pace as soon as our May meeting," and a further advance in the exchange rate may continue to alleviate the downward trend in retail sentiment seen last year.

 

The number of traders who are net-long has decreased by 5.59 percent from yesterday and 17.80 percent from last week, while the number of traders who are net-short has increased by 2.35 percent from yesterday and 14.47 percent from last week. The fall in net-long interest has controlled crowding behavior, as 73.79 percent of traders were net-long USD/CAD last week, while the increase in net-short interest coincides with the exchange rate's effort to reclaim the 50-Day SMA (1.2660).

 

With that said, the Bank of Canada's rate decision may jeopardize the advance from the yearly low (1.2403) if the central bank implements a 50bp rate hike and begins quantitative tightening (QT), but USD/CAD may continue to retrace the decline from the March high (1.2901) if Governor Macklem and Co. adopt a predetermined course for monetary policy.

Daily Chart of the USD/CAD Exchange Rate

Keep in mind that USD/CAD appeared to be on pace to test the November low (1.2352) in March, but a lack of impetus to close below the Fibonacci overlap between 1.2410 (23.6 percent expansion) and 1.2440 (23.6 percent expansion) has brought the exchange rate back towards the 50-Day SMA (1.2660).

 

A closing above the 1.2620 (50 percent retracement) to 1.2650 (78.6 percent expansion) region would be required to bring the 1.2770 (38.2 percent expansion) level to the forefront, with the next zone of interest coming in around 1.2830 (38.2 percent retracement) to 1.2880. (61.8 percent expansion).

 

However, a failure to trade above the 50-Day SMA (1.2660) might send USD/CAD down towards the 1.2510 (78.6 percent retracement) region, with the next area of interest located between 1.2410 (23.6 percent expansion) and 1.2440. (23.6 percent expansion).

 

image.png 

Suggestion