2021-10-12 • Updated
Just look at the charts above – the Canadian dollar has skyrocketed! Such strong growth has been caused by several reasons.
First, oil prices have gained from the global energy crunch. Crude oil has hit the highest level since 2014 as the demand is growing ahead of winter, while OPEC+ doesn’t rush to increase output significantly. Canada is one of the world’s largest oil producers and its currency has historically positively correlated with oil prices.
Second, Canadian employment figures came out better than analysts forecasted on Friday. It can signal another taper from the Bank of Canada later this month, which may push the CAD up. Just to remind you, the BOC was the first bank that tightened the policy after the Covid-19 crisis. Thus, it’s quite reasonable for the bank to continue tapering after a strong job report. Meanwhile, the US has revealed the worse-than-expected NFP numbers. Canadian Dollar strength and US Dollar weakness pressed USD/CAD to its lowest level since July.
USD/CAD has broken through all the moving averages and the support line while moving down. It has stopped ahead of the support level of 1.2445 – the July lows which the pair has failed to cross and reversed up. Let’s wait for a breakout. If it occurs, the pair is likely to drop to the psychological level of 1.2400. However, before the breakout happens, we might see a pullback to the 200-day moving average of 1.2500.
The upcoming August inflation data may send mixed signals. The 12-month headline inflation rate is expected to rise to 3.6%, causing concerns for the Biden administration. However, core inflation, which excludes food and energy prices, is projected to decrease to 4.3%, aligning with the Federal Reserve's goals. Past price trends influence both figures, so looking at recent data for a more accurate picture is crucial.
The odds of a final interest rate hike by the US Federal Reserve (Fed) this year have dropped after US job openings hit their lowest levels since early 2021. This has led to a correction in the US Dollar as traders reduced their bets on further rate hikes.
Here we go again, my friends. It’s time to look critically into the future of what trading opportunities September might have in store for us. As always, it is essential to note that the views expressed here are mine and should not be considered financial advice without proper examination.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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Don’t waste your time – keep track of how NFP affects the US dollar and profit!
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