The USDCAD experienced a climb today after a gauge of brightening data from U.S was unveiled
Yesterday (18/8), the report from Federal Reserve Bank of Philadelphia indicated that its business conditions index obtained nearly 5 points to the reading of 2.0 in August. It was partly due to a soar in shipments from factories. This statistics marked the third positive reading for the index this year. A number above 0.0 suggests improving conditions, while a figure below indicates worsening ones.
Fig. US Philly Fed Manufacturing Index
On the same day, the Labor Department announced the number of Americans filing for unemployment insurance. It dropped to a seasonally adjusted 262,000 for the week ended on August 13th, from 266,000 in the previous week. Analyst had expected a higher number of 269,000 for the claims. This figure was below the level of 300,000, a threshold relates to a strong labor market for 76 straight weeks, longest stretch since 1973. A positive data from the Labor Department continues to reinforce the solidity and strength of U.S labor market. That would encourage Fed to lift up its rate in the upcoming months.
Fig. US Unemployment Claims
Besides, New York Fed President William Dudley confirmed his ground of a rate hike at the September 20-21 meeting. He was upbeat about the labor force thanks to strong employment and the gains of middle-wage job which outnumbered gains in higher- and lower-wage job. Moreover, former Federal Reserve Chairman Alan Greenspan forecast that interest rates would begin rising soon. As a result, the greenback climbed up sharply against the Loonie, as investors adjust positions.
Previously, the minutes of FED July meeting released on Wednesday (17/8) showed a divided stance of the central bank. While some members pushing the timing for a rate hike sooner, others still putting a big question mark over the economy’s strength. However, markets took that release for granted that Fed’s favor towards dove. This lead the greenback fell quite strongly on the fourth day of this week.
Fig. DXY D1 Technical Chart
Meanwhile, the BOJ was purchasing the entire $299.1 billion in bonds newly issued by the government annually, not directly underwriting bonds to fund government spending. However, some economists said that this purchase action has the same effect of helicopter money, which means central banks injecting cash directly into the real economy. The central bank was attempting to hail the path of continuously stronger currency, which has dragged down the country’s exports by 14% on yearly basis, according to the Japanese Ministry of Economy on Thursday (18/8). This was the tenth month in a row that exports fell from a year earlier. This policy could solve the country’s headache around weak export statistics, but on the other hand push the investors to move far from the Japanese yen and find a safe shelter with higher returns as the greenback.
The next signal on the Fed’s thinking will be later this month when Fed Chair Janet Yellen speaks at a meeting of global policy makers in Jackson Hole, Wyoming.
On the other hand, according to report from Statistics Canada yesterday, foreign investors scooped up their holdings of Canadian securities by $9.0 billion in June, driven by the portfolio investment in equities since April 2004. Yet, this is well below expectations of $17.2 billion and the previous month’s reading of $13.99 billion.
By the meanwhile, oil price continued its strong rally on Thursday (18/8) after the U.S Energy Information Administration reported that the country’s crude oil production fell by 2.5 million barrels in the week ended August 12. It surpassed an expected 200,000-barrel fall. Additionally, markets are expecting a consensus deal between the world’s largest producers, including the Saudi Arabia-led OPEC cartel and Russia. An oil curb agreement would put an end to a two-year supply glut and boost the prices higher. This could be considered as good news for commodity-reliance economy as Canada.
Later today, Statistics Canada would publish core consumer price index (CPI) for July, which is anticipated to remain flat. The country’s core CPI for the June also had no move. In addition, the core retail sales for June would be unveils right after the core CPI, with the markets’ expectation of a 0.3% tick-up, following a 0.9% advance in May.
Fig. USDCAD H4 Technical Chart
USDCAD is lingering around the price area of 1.28313 after surging high from the support of 1.27623, a fresh lows since the historic Friday – 24th June. The last candle shows that the two opposite site – the sellers and the buyers – are all striving their best to take the lead in the market. However, RSI (14) stood pat low near the average level, indicating that the bear is still trying to occupy its adjustment of the pair once again. The price is supposed to head up to the 23.6% of Fibonacci retracement before falling back.
Analyses of Group Fiinvesting
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