Archive for Financial News – Page 193

13 Jul

Two potential targets for WSt30m_index

By ForexTime 

  • WSt30_m index posted new 2023 intraday high on Wednesday
  • Markets cheered yesterday’s lower-than-expected US inflation data
  • JPMorgan and other big US banks to unofficially kick off US earnings season on Friday
  • WSt30_m bulls may next aim for 335374 and 36470, as long as risk-on sentiment holds

 

US stock markets cheered the US inflation data released yesterday (Wednesday, July 12th). The consumer price indexes out of the world’s largest economy came in below market expectations.

Such data has raised hopes that the Fed will soon call time on its rate hikes that began over a year ago, and the thought of peak US rates being close at hand was a cause for rejoicing for risk assets.

The WSt30_m index, which tracks the benchmark Dow Jones Industrial average index, joined in Wednesday’s party by posting its highest intraday price so far this year.

 

However, traders and investors will be bracing for another key event ahead.

Tomorrow (Friday, July 14th), the US earnings season will unofficially kick off with the latest quarterly financial results out of Wall Street banking titans, namely JPMorgan, Citigroup, and Wells Fargo.

Note that JPMorgan alone comprises almost 3% of the Dow Jones Industrial Average index (tracked by WSt30_m).

And the Dow index contains two banking heavyweights in the form of JPMorgan and also Goldman Sachs, which combined account for 9.1% of the benchmark index which tracks 30 industry leaders within the US economy.

With all that in mind, the WSt30_m index is set to be heavily influenced by how markets react to the latest earnings results out of JPMorgan and its peers over the coming days.

 

Looking at the price charts …

The WSt30_m index has been oscillating between a weekly support and resistance level since the beginning of June.

The battle between the bulls and bears has not been decided yet, but the bulls seem poised for a retest of the weekly resistance level that happened on 12 July.  

This possible scenario is confirmed by the fact that the price is above the 15 and 34 Simple Moving Average with the Momentum Oscillator adding its weight as well when it broke above the 100-base line into bullish terrain.

If the bulls can drive the price above the weekly resistance level and specifically a critical resistance that formed on 12 July at 34627, then two possible targets become possible from there.

 

Potential opportunities

Attaching the Fibonacci tool to the top 34627 and dragging it to a bottom that formed on 26 June at 33631, the following potential targets can be established:

  • Potential Target 1: 335374
    (situated just before a weekly resistance level at 35569).
  • Potential Target 2: 36470
    (just before another weekly resistance level at 36667)

If the support level at 33631 is broken, this scenario is no longer valid and must be reassessed.

As long as bulls can keep up the momentum with demand overcoming supply, the market outlook for the WSt30_m index on the Daily time frame should have bullish potential.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
12 Jul

The cryptocurrency market digest (BTC, SOL). Overview for 12.07.2023

By RoboForex.com

The BTC quotes on Wednesday rose to 30,575 USD.

The flagship cryptocurrency has not yet used either seasonal cycles that favour a price increase or support from the US stock market. Investors seemingly save power for future purchases. However, the longer this pause drags on, the more chances there are for a price slump.

The resistance levels remain the same: 30,800 USD and 31,150 USD. The support level is still at 29,800 USD.

Today the market will keep an eye on the US inflation statistics for June. The decision of the US Federal Reserve on the interest rate at the meeting in July depends on these data.

The cryptocurrency market capitalisation has risen to 1.190 trillion USD. The BTC share has increased to 50.0%, while the ETH share remains at 19.0%.

New York State Attorney is searching out the FTX co-founder

New York State Attorney is looking into the whereabouts of the FTX cryptocurrency exchange co-founder. The reason is possible violations of the election campaign financing legislation in the US.

SOL might reverse upwards

The technical picture of the SOL token demonstrates a breakout of the short-term and the long-term resistance levels. The coin dropped to the low on 10 June this year. After that, the price entered an ascending channel, where it has stayed since. Market participants think that a bullish trend is forming there.

Article By RoboForex.com

Attention!
Forecasts presented in this section only reflect the author’s private opinion and should not be considered as guidance for trading. RoboForex LP bears no responsibility for trading results based on trading recommendations described in these analytical reviews.

Cryptocurrencies Financial News
12 Jul

US CPI: Fed will raise rates this month despite cooler than expected inflation

By George Prior

The US Federal Reserve won’t be swayed and will raise interest rates this month despite inflation coming in cooler than expected, says the CEO and founder of one of the world’s largest independent financial advisory, asset management and fintech organizations.

Nigel Green of deVere Group’s warning comes as the latest US CPI comes in lighter than economists predicted.

He says: “Despite the data showing that the battle against inflation in the world’s largest economy is being won, we expect the Federal Reserve will resume its interest rate hiking agenda this month.

“The central banks’ officials will argue that there is still work to be done to tame inflation and they are unlikely to be dissuaded from their course of action for the time being.

“While we believe that the Fed will raise rates in July, there is now less justification for further hikes later this year.”

The deVere CEO is urging the US central bank not to raise interest rates past July.

“Investors are increasingly concerned that the Federal Reserve could with further hikes overtighten and that would steer the US economy into a major recession.

“The central bank must also ensure the broader picture is maintained and not be too cautious by overdoing the hikes, which would trigger the US recession deeper and longer.

“As the world’s largest economy, this would clearly have a serious, negative impact on the global economy.

“The most aggressive tightening campaign in decades is not quite finished – but the tide could be turning.

“Against this backdrop, a good fund manager will help you pick out the winners and losers to help you sidestep the risks to your wealth and seize the opportunities to build it for the long-term.”

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

Economics & Fundamentals Financial News
12 Jul

Mid-Week Technical Outlook: FX Majors & Indices

By ForexTime 

  • USD Index smashes into 101.50
  • EURUSD challenges fresh resistance
  • GBPUSD bulls switch into higher gear
  • SPX500_m approaches key resistance
  • NQ100_m ready to breakout?

The dollar extended losses while stocks nudged higher on Wednesday ahead of key US inflation data that could influence the Federal Reserve’s policy stance.

Attention will also be directed towards the pending Bank of Canada rate decision, speeches from numerous Fed officials, and big risk events including earning announcements by US banks on Friday.

In the meantime, here are some technical setups to keep an eye on this week:

USD Index smashes into 101.50

The dollar remains under pressure on the daily timeframe with prices trading marginally below 101.50 as of writing. Sustained weakness below this level may open a path toward 101.10 and 100.72, respectively. Should 101.50 prove to be reliable support, a rebound back toward 102.35 could be on the cards.

EURUSD tests fresh resistance

A weaker dollar has propelled the EURUSD to levels not seen since early May around 1.1032. Prices are firmly bullish on the daily charts with a breakout above 1.1032 opening a path towards 1.1090. Should bulls run out of steam, a decline back towards 10950 and 1.0900 may be on the table.

GBPUSD bulls back in town

The GBPUSD hit a fresh 2023 high this morning. Prices remain firmly bullish on the daily charts as there have been consistently higher highs and higher lows. A solid breakout and daily close above 1.3000 could open the doors towards 1.3110. Should 1.3000 prove to be strong resistance, prices may slip back towards 1.2840.

NZDUSD trapped within a range

It was a choppy affair for the NZDUSD after New Zealand’s central bank left interest rates unchanged for the first time in almost two years. The currency pair spiked towards 0.6240 before giving back gains. Prices remain trapped within a range with support around 0.6100 and resistance at 0.6240. A breakout above 0.6240 may see an incline towards 0.6310. Should prices slip back under 0.6100, we could see 0.6000.

USDJPY tumbles towards 138.80

A weaker dollar has sent the USDJPY tumbling toward the 138.80 support level. A breakdown below this point could see a further selloff towards 138.00 and the 200-day SMA around 137.10. Should prices rebound from 138.80, we could see 141.00 and higher.

SPX500_m approaches resistance

Prices remain bullish on the daily charts. A strong breakout above 4463 could inspire an incline towards 4500. Should bulls lack the strength to conquer 4463, prices may descend back within the range with 4332 acting as the next key level of interest.

NQ100_m breakout pending?

The NQ100_m could be gearing for a breakout on the daily charts if prices push beyond 15300. A solid close above this point may encourage an incline towards 15700. Any signs of weakness in the uptrend could see prices retest 14965 and 14670, respectively.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Forex and Currency News
12 Jul

Today the main focus of investors is on US inflation data

By JustMarkets

On Tuesday, stock indices closed higher, helped by growth in the energy and technology sectors. At yesterday’s close, the Dow Jones Index (US30) increased by 0.93%, while the S&P 500 Index (US500) added 0.67%. The NASDAQ Technology Index (US100) closed positive by 0.55%.

Today, the US will release inflation data for June. Inflation is expected to fall from 5.3% to 5.0% year-over-year. Core inflation (excluding food and energy prices) is also expected to fall from 4% to 3.1% year-over-year. Although the issue of a rate hike at the July meeting is almost settled, traders are expecting a softer stance from the US Fed after the data release. Several Fed officials said yesterday that the Fed is nearing the end of its rate hike cycle, which sparked a rally in risk assets this week while also sending the dollar lower.

Shares of 3M (MMM) jumped nearly 5% after Bank of America raised its rating on the industrial and consumer products maker to “neutral” from “downgrade.” Wall Street’s major banks will kick off the second-quarter reporting season on Friday. Banks are expected to report higher profits in the second quarter as higher interest payments offset a downturn in deal-making. That said, JPMorgan (JPM) could lead the sector’s growth. Jefferies upgraded JPM to “buy” from “hold,” noting the strength of its balance sheet and earnings potential.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) rose by 0.75%, France’s CAC 40 (FR40) gained 1.07%, Spain’s IBEX 35 (ES35) added 0.81%, and the UK’s FTSE 100 (UK100) closed positive by 0.12%.

German inflation continues to rise. The consumer price level rose by 0.3% over the last month. In annualized terms, inflation rose from 6.1% to 6.4%. The ECB is likely to continue to hike until September, and then it will depend on new inflation and labor market data.

There are growing expectations that the oil market may tighten in the second half of the year, supported by signs of oil production cuts and Saudi Arabia’s recent pledge to cut production by 1 million barrels per day in July. These have contributed to the rise in oil prices in recent days. The US will also release crude oil inventories data for last week today, where a decline of 2.2 million barrels is expected.

Asian markets were trading higher on Tuesday. Japan’s Nikkei 225 (JP225) was up by 0.04% for the day yesterday, China’s FTSE China A50 (CHA50) added 0.56%, Hong Kong’s Hang Seng (HK50) increased by 0.97% for the day, and Australia’s S&P/ASX 200 (AU200) close positive by 1.50%.

The Chinese Communist Party-backed China Securities Journal reported on Wednesday that Beijing is likely to increase stimulus spending after a series of weak economic indicators in the country. Increased stimulus spending in China is expected to boost economic growth in the country, which in turn could boost oil demand amid rising domestic fuel consumption.

The Reserve Bank of New Zealand (RBNZ) left rates unchanged at 5.5% at its monetary policy meeting (MPC) today. Overall, the statement and minutes showed a dovish tone, raising the possibility that the RBNZ has ended the current tightening cycle, especially given the fact that the New Zealand economy is already in recession. The Reserve Bank said it expects core inflation to fall further from its peak and for core inflation to fall as capacity constraints ease. The Central Bank’s next monetary policy statement will be released on August 16.

S&P 500 (F) (US500) 4,409.53 +10.58 (+0.24%)

Dow Jones (US30) 33,944.40 +209.52 (+0.62%)

DAX (DE40)  15,673.16 +69.76 +(0.45%)

FTSE 100 (UK100) 7,273.79 +16.85 (+0.23%)

USD Index  101.75 −0.22 (−0.21%)

Important events for today:
  • – Japan Producer Price Index (m/m) at 02:50 (GMT+3);
  • – New Zealand RBNZ Interest Rate Decision at 05:00 (GMT+3);
  • – New Zealand RBNZ Rate Statement at 05:00 (GMT+3);
  • – Australia RBA Governor Lowe Speaks at 06:10 (GMT+3);
  • – UK BoE Financial Stability Report at 09:00 (GMT+3);
  • – UK BoE Gov Bailey Speaks at 11:00 (GMT+3);
  • – US Consumer Price Index (m/m) at 15:30 (GMT+3);
  • – US FOMC Member Kashkari Speaks at 16:45 (GMT+3);
  • – Canada BoC Interest Rate Decision at 17:00 (GMT+3);
  • – Canada BoC Monetary Policy Report at 17:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – Canada BoC Press Conference at 18:00 (GMT+3);
  • – US FOMC Member Mester Speaks at 23:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
11 Jul

Finalto signed with Your Bourse to distribute liquidity to their clients directly through the YB Platform

Finalto, the world-leading liquidity provider & prime of a prime broker, has signed with Your Bourse, a leading trade execution technology provider for the retail and institutional MT4/MT5 brokers, to offer Finalto liquidity directly to Your Bourse clients by distributing FIX Sessions from Your Bourse PaaS.

At the heart of Your Bourse’s offerings lies their flagship product, the Matching Engine. Connecting directly through Your Bourse allows Finalto’s clients to benefit from lightning-fast execution in under two microseconds per order. Furthermore, Your Bourse allows for the FIX session to be issued and configured in just a few minutes.

The clients will connect to Finalto via YB FIX API Server. Nonetheless, the clients who wish to connect their MT4 or MT5 directly can also do that using YB MT4 Bridge or MT5 Gateway.

As an integral part of this partnership, Finalto will seamlessly distribute its institutional liquidity directly to Your Bourse clients through Your Bourse Platform. Finalto’s liquidity will be effortlessly accessible to clients at their disposal, wholly integrated within the Your Bourse Platform. This fusion of flexibility in trade conditions, coupled with Finalto’s liquidity, promises an exceptional experience for the clients.

Paul Groves, UK B2B CEO at Finalto, said: “We have known the Your Bourse team for many years and seen the company grow and establish itself in a very competitive market. Finalto is always willing to work with partners who share the same beliefs in customer service, stable technology and fair pricing. We see the relationship with Your Bourse as important to our future plans and look forward in working together for years to come.”

Elina Pedersen, co-CEO and CRO of Your Bourse noted the importance of partnering with Finalto, which is a significant step for Your Bourse and its customers. «It is a huge advancement for both companies showcasing our unwavering pursuit of excellence and dedication to delivering distinctive services within the financial industry. I have worked with Finalto in the past as a client myself for many years, and it’s a true privilege for Finalto to become a client of ours. Finalto has always been one of the first choices for Your Bourse clients, and I am sure that the relationship will continue growing now that Finalto has become one of the Your Bourses clients and preferred partners».

Finalto is a market leader in global financial services. Finalto provides unrivalled liquidity and prime broker solutions, enabling to access over 800 instruments across: FX, Precious Metals, Base Metals, Single Stock CFDs, Index CFDs, Crypto Currencies and Energies through one cross-margined account, increasing the capital efficiency of your business.

Your Bourse’s suite of services includes MT5 gateway and MT4 bridge, multi-asset liquidity aggregation, risk management, client profiling, real-time and historical reporting, and MT4/MT5 hosting in all Equinix data centers with 99.999% SLA, as well as plug-ins for MT4 and MT5 and FIX API connections for B2B clients.

For more information on Your Bourse, please visit www.yourbourse.com

For more information on Finalto, please visit https://www.finalto.com/

Finance Press Release Financial News
11 Jul

Hedge funds increase positions to sell the dollar. China may resort to additional stimulation of the economy

By JustMarkets

At yesterday’s stock market close, the Dow Jones Index (US30) increased by 0.62%, while the S&P 500 Index (US500) added 0.24%. The NASDAQ Technology Index (US100) closed positive by 0.18% on Monday.

The US consumer credit growth slowed to a more than two-year low in May, reflecting the first decline in volume since the pandemic began. Total loans rose by $7.2 billion. This figure, which excludes inflation, was below all forecasts. While low unemployment and steady wage growth have allowed many consumers to continue spending, persistently high prices are forcing others to save.

Societe Generale’s top economist says Central Banks are at the “end of the road” in fighting inflation. A resilient labor market and the apparent strength of the economy mean the US Federal Reserve is likely to raise the interest rate by 0.25% in July. According to CME Group’s FedWatch tool, the market rates the probability of a rate hike at 90%. Nevertheless, hedge funds have shifted to an overall bearish bet on the dollar for the first time since March, believing the Federal Reserve is nearing the end of its interest rate hike cycle. Over the past week, credit investors opened a net short position in the US currency of 20,091 contracts. A week earlier, their long position totaled 5,196 contracts.

Equity markets in Europe were mostly up yesterday. Germany’s DAX (DE30) rose by 0.45%, France’s CAC 40 (FR40) gained 0.45%, Spain’s IBEX 35 (ES35) added 0.04%, and the UK’s FTSE 100 (UK100) closed up by 0.23%.

The UK government and the Bank of England “will do whatever is necessary, for as long as it takes” to bring inflation back to the 2% target, Treasury Secretary Jeremy Hunt said on Monday, reinforcing signs that interest rates will remain high for some time to come. UK inflation hit a 41-year high of 11.1% in October and is falling at a slower pace than in other major economies. Last month, the Bank of England unexpectedly raised its key interest rate by 0.5% to 5% after inflation held at 8.7% in May. Markets expect rates to peak at 6.25% or 6.5% later this year or early 2024.

On Sunday, French Central Bank governor François Villeroy de Galhau opposed a proposal to raise the European Central Bank’s inflation target to 2%. Villeroy, who sits on the ECB’s governing council, also said that interest rate hikes are close to the maximum and that rates will be held at elevated levels long enough for their impact on the economy to be felt.

Oil prices rose in Asian trading on Tuesday on the prospect of supply cuts by the world’s biggest oil producers, while expectations of expanded stimulus measures in major importer China also boosted sentiment. The prospect of supply cuts (Saudi Arabia and Russia have pledged to cut production further) is also bullish for oil prices. Nevertheless, caution over upcoming US inflation data and speeches from the Federal Reserve are holding back gains as markets want more information regarding the US Fed’s future trajectory.

Asian markets traded flat on Monday. Japan’s Nikkei 225 (JP225) decreased by 0.49% for the day yesterday, China’s FTSE China A50 (CHA50) added 0.70%, Hong Kong’s Hang Seng (HK50) was up by 0.89% for the day, and Australia’s S&P/ASX 200 (AU200) closed negative by 0.55%. Most Asian stocks rose sharply on Tuesday amid expectations that the Federal Reserve is close to ending its interest rate hike cycle for this year, while the prospect of additional stimulus measures from China also contributed to sentiment.

A string of weak economic data from China has caused bets to rise that Beijing will take additional stimulus measures to help support the slowing economic recovery. Inflation data on Monday showed that consumer spending is on the verge of deflation, sending mostly bearish signals for Asia’s largest economy. Shares in China’s big real estate developers rose on Tuesday after the People’s Bank said it would extend financial support for the sector until the end of 2024. But despite a slew of stimulus measures, China’s economy is still struggling to recover from COVID-era lows, and weak economic data over the past three months supports that view.

S&P 500 (F) (US500) 4,409.53 +10.58 (+0.24%)

Dow Jones (US30) 33,944.40 +209.52 (+0.62%)

DAX (DE40)  15,673.16 +69.76 +(0.45%)

FTSE 100 (UK100) 7,273.79 +16.85 (+0.23%)

USD Index  101.75 −0.22 (−0.21%)

Important events for today:
  • – Australia NAB Business Confidence (m/m) at 04:30 (GMT+3);
  • – UK Average Earnings Index (m/m) at 09:00 (GMT+3);
  • – UK Claimant Count Change (m/m) at 09:00 (GMT+3);
  • – UK Unemployment Rate (m/m) at 09:00 (GMT+3);
  • – German Consumer Price Index (m/m) at 09:00 (GMT+3);
  • – German ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – Eurozone ZEW Economic Sentiment (m/m) at 12:00 (GMT+3);
  • – US FOMC Member Bullard Speaks at 16:00 (GMT+3).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
11 Jul

Markets Advance Ahead Of US CPI

By ForexTime

Asian markets rose on Tuesday after China strengthened support for its struggling property sector. European futures are pointing to a positive open as attention falls on the pending German ZEW Economic Sentiment Index report. In the currency arena, the dollar has weakened on the back of falling Treasury yields with investors digesting the remarks from numerous Fed speakers yesterday.  Regarding commodities, oil is finding support as investors evaluate the demand outlook for China following some measures by Beijing to support its real-estate sector. Gold could push higher in the short term thanks to a weaker dollar and falling Treasury yields. Although the US inflation report is currently in the spotlight, earnings announcements by Wall Street banks on Friday could hijack investor attention.

US June CPI Report in Focus

All eyes will be on the latest US inflation report on Wednesday which has the potential to influence Fed hike expectations. Annual headline inflation is expected to slow to 3.1% in June, a noticeable decline from the 4% reading in May. However, annual core CPI, which strips out volatile energy and food prices, is expected to cool to 5% from 5.3% seen in the prior release. This remains above the Fed’s 2% target but ultimately, signs of cooling inflationary pressures will boost expectations around the Fed’s hiking cycle ending soon after July’s FOMC policy meeting. However, still stubborn inflation prints could fuel speculation around the Fed keeping rates higher for longer.

Commodity Spotlight – Gold

Gold bulls are likely to draw strength from a weaker dollar and falling US Treasury ahead of the US CPI report on Wednesday. Should the report show further signs of slowing inflation, this could fuel speculation around the Fed’s hiking cycle nearing an end. Such a development could boost attraction for zero-yielding gold, potentially pushing prices beyond the $1940 region and higher towards $1960. Should prices remain trapped below $1932, this could open a path back to $1910 and $1900, respectively.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Economics & Fundamentals Financial News
10 Jul

EUR/USD Rises on Stats

By RoboForex Analytical Department

The market’s most traded currency pair rose to the level of 1.0960 by Monday.

EUR/USD strengthened due to the weakness of the US dollar. Investors were disappointed by the flow of statistical data from the US labour market for June.

To be specific, the number of non-farm payrolls increased by only 209 thousand against the May value of 306 thousand. In private business, the number of jobs increased by 149 thousand, while in the public sector, it rose by 60 thousand. The unemployment rate remained at 3.6%. Average wages increased by 4.4% y/y against the forecast of 4.2%.

Market participants were counting on strong employment data to help them understand the future actions of the US Federal Reserve.

Technical analysis of EUR/USD:

On the H4 chart, EUR/USD secured above the upper boundary of a descending correction channel after a failed test of the support level. The price is above the moving averages, which indicates growing pressure from the buyers. The correction is expected to end at 1.0935, after which the quotes might rise to the nearest resistance level at 1.1015. Technically, this scenario is confirmed by the MACD: its signal line has secured above the zero level, and the histogram has been growing for 14 periods. A negative scenario for buyers would be a break of the lower boundary of the medium-term ascending channel with the price consolidating under the level of 1.0835.

On the H1 chart, EUR/USD is correcting within a bullish flag pattern. The target of this move is 1.0955. The completion of the pattern is expected with a breakout of the upper boundary of the descending channel and the price securing above 1.0965. The moving averages also indicate the presence of an uptrend, with a crossover that occurred on 10 July 2023. Technically, the MACD does not confirm the scenario of EURUSD growth. Moreover, there is a risk of forming a bearish divergence after a steep increase to 1.0955. With such a scenario, there is potential for a decline by the divergence. However, if the bearish divergence is broken again, such behaviour should be interpreted as a weakness on the sellers’ part.

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Financial News Forex and Currency News
10 Jul

Trade Of The Week: USDCAD Knocks On Major Support

By ForexTime 

  • CAD weakens against most G10 currencies month-to-date.
  • Big week for the USDCAD thanks to BoC rate decision and US inflation data.
  • Trader’s pricing in a 67% probability of a BoC hike on Wednesday.
  • US Inflation data could influence USDCAD this week.
  • USDCAD trapped within wide range but breakout could be pending.

The Canadian Dollar has weakened against most G10 currencies month-to-date despite ending June as one of the top performers versus the US Dollar.

Despite the choppy price action, the USDCAD could see heightened volatility this week as investors evaluate last Friday’s mixed US jobs report along with Canada’s strong jobs data. On top of this, the Bank of Canada’s rate decision and highly anticipated US inflation data on Wednesday could place the currency pair on a rollercoaster ride.

Taking a quick peek at the technical outlook, prices are back within a range on the weekly timeframe following the breach below 1.3250 back in early June.

The USDCAD could be gearing up for a significant move and here are 3 reasons why:

  1. Bank of Canada rate decision

On Wednesday, July 12th – the Bank of Canada (BoC) will announce its rate decision.

Last Friday’s robust jobs data from Canada boosted speculation around the BoC hiking interest rates in July. The country added 60,000 jobs in June which smashed expectations, but the unemployment rate rose to 5.4% – the highest since February 2022. Traders are currently pricing in a 67% probability of a 25-basis point hike on Wednesday with this fully priced in by September’s meeting.

  • Should the BoC move ahead with a rate hike in June or signal a rate hike in September, this could be the catalyst to trigger another major breakdown below 1.3250 on the USDCAD.
  • An unexpected scenario where the central bank adopts a dovish stance towards rates could weaken the CAD, triggering a rebound on the USDCAD.

  1. US June Consumer Price Index (CPI)

On Wednesday, July 12th – the latest US inflation report will be published.

All eyes will be on the incoming US inflation data which could influence Fed hike expectations. Headline inflation is expected to slow 3.1% in June 2023 vs June 2022, a noticeable decline from May’s 4% year-on-year. However, Core CPI year-on-year which strips out volatile energy and food prices is expected to cool 5% from the 5.3% seen in May which remains above the Fed’s 2% target.

  • Ultimately, signs of still stubborn inflation may boost the dollar as expectations mount around the Fed keeping interest rates higher for longer. A strong dollar may push the USDCAD back towards 1.3600 and higher.
  • Should June’s CPI report show signs of cooling inflation across the board, this could fuel hopes around the Fed pausing rate hikes beyond July’s policy meeting. If the dollar weakens on this prospect, the USDCAD may sink lower.

  1. Technical forces: Breakdown?

It has been the same old story for the USDCAD on the monthly timeframe.

Prices remain trapped within multiple layers of support and resistance. Major monthly support can be found at 1.3250 and monthly resistance at 1.3850. A breakout/down beyond these levels may open a path higher towards 1.4100 or lower towards 1.2970.

Focusing on the daily timeframe, prices are bouncing within a narrower range with resistance at 1.3650 and support at 1.3270. Despite the recent rebound, bears still seem to be in some position of power with prices trading below the 50, 100, and 200-day SMA. A selloff below 1.3270 could open the doors towards 1.3130 and 1.2970, respectively. Should prices push back above the 200-day SMA, bulls could challenge 1.3650 and 1.3850, respectively.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Forex and Currency News
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