2020-09-30 • Updated
ADP, US GDP, Chicago PMI and Canadian GDP – all numbers exceeded expectations. Which currency will outperform? Let’s try to find out.
The day was full of economic releases. The Canadian GDP m/m came out better than analysts expected: 3.0%, while the forecast was 2.9%. Besides, the US GDP q/q contracted by 31.4% in the second quarter, but still beat estimates of -31.7%. After the report the Canadian dollar surged, pushing USD/CAD to the downside.
Moreover, US Chicago PMI turned out 62.4, while only 52.0 was anticipated. What’s more important, the ADP report came out 749 000, which was better than estimates of 650 000. This data is generally used to predict NFP numbers, which will be out on Friday. As a result, it underpinned the USD.
If we look at the 4-hour chart, we’ll notice that USD/CAD has been trading in a horizontal corridor for over a week. There is the strong support at the intersection of the bottom of that range and the lower trend line at 1.3360. The pair is unlikely to break it. Moreover, the strong USD should eventually outrace the loonie. The move above the resistance of 1.3415 will drive the price to the next round number at 1.3500. Support levels are 1.3360 and 1.3300.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
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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