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US Secretary of State Rubio urged India and Pakistan to keep communication channels open to avoid escalation of the situation.Japanese Chief Cabinet Secretary Yoshimasa Hayashi: Japan strongly urges India and Pakistan to cool down the situation through dialogue.On May 7, Li Yunze, director of the Financial Supervision Bureau, said at a press conference held by the State Council Information Office that the Financial Supervision Bureau will further launch a package of policies to support the financing of small and micro enterprises and private enterprises in the near future, focusing on four aspects: First, increase supply, deepen and implement the financing coordination mechanism, carry out in-depth visits to thousands of enterprises and households, increase the issuance of first loans, renewal loans, and credit loans, and drive the growth rate of inclusive small and micro enterprise loans to be higher than the average growth rate of all loans. Second, reduce costs, timely transmit market interest rate dividends and internal funds transfer pricing preferences, and at the same time standardize the cooperation between institutions and third parties to promote a steady decline in comprehensive financing costs. Third, improve efficiency, promote banks to simplify internal processes, flexibly meet various investment needs, and ease the turnover pressure of corporate funds. Fourth, improve the environment, strengthen the coordination of relevant policies such as finance, taxation, and industrial supervision, and accelerate the improvement of relevant systems in terms of guarantee credit investigation, credit repair, and issuance standards.The Ukrainian military said the apartment was on fire after the Russian drone attack in Kyiv.Li Yunze, director of the State Financial Regulatory Administration, said at a press conference held by the State Council Information Office on May 7 that the issuance of first loans, renewal loans and credit loans to micro and small enterprises will be increased.

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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