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Canada’s job growth sparkles but Canadian dollar fallsThe Canadian dollar can’t find its footing and is trading at nine-week low against the US dollar. In the North American session, USD/CAD is trading at 1.3792 at the time of writing, up 0.21%. The Canadian dollar has recorded eight straight losing sessions and is down 1.9% in October. The week ended on a high note, as Canada’s employment growth jumped by 46.7 thousand, crushing the market estimate of 27 thousand and sharply higher than the August reading of 22.1 thousand. Full-time employment surged by 112 thousand, following a decline of 43.6 thousand in August, while the unemployment rate dropped from 6.6% to 6.5%. The impressive numbers couldn’t stop the Canadian dollar’s nasty slide but it will please Bank of Canada policymakers. The central bank has shifted its primary focus from inflation to risks to the labor market, now that inflation has been largely contained. In August, CPI dropped to 2%, its lowest level since February 2021. The BoC meets next week and has a tough decision to make. The drop in inflation raised the odds of a 50-basis point cut but Friday’s employment report was stronger than expected and supports the case for a modest 25-bps cut. The BoC has been aggressive in its rate-cutting cycle and has lowered rates three times this year in a bid to ease the pressure of elevated rates. The Federal Reserve has been late to the rate-lowering party, delivering its first rate cut in September. Still, the oversized 50-basis point cut in September signaled that the Fed means business and isn’t afraid to slash rates with large cuts. The Fed is expected to trim rates by an additional 50 or 75 basis points before year’s end. The most likely scenario is rate cuts of 25 bps in both November and December. The Fed could, however, deliver one more 50-bps cut if employment or inflation numbers are lower than expected. USD/CAD has pushed above resistance at 1.3758 and is testing resistance at 1.3790. The next resistance line is 1.3817 1.3731 and 1.3699 are the next support levels
by OANDA
BYD - What next post-earnings and the BoC's stimulus?HKEX:1211 has had a strong year in growth prospects, reporting solid earnings growth thanks to its robust EV sales and expanding footprint in international markets. The recent earnings beat highlighted an impressive increase in revenue, driven by the demand for both their electric and hybrid vehicles. But what we can notice is that the stock has only reflected this as a c.16% rise in price YTD. However, the question now is: where does BYD go from here? - More recently, the BoC's latest stimulus measures, including rate cuts and support for the real estate sector, could indirectly benefit BYD. With increased liquidity and consumer confidence, domestic demand for EV's could rise, especially if coupled with additional green energy incentives. - As for the earnings release, the markets reacted well, and with this new-found optimism in the markets, with both the SEE Composite Index SSE:000001 and the Hang Seng Index TVC:HSI up 5.78% and 9.28% in the past 5 days, is this the turn-around for China as a whole?
HKEX:1211Long
by FytaLO
1
AUD/USD – Australian retail sales flat, Aussie shrugsThe Australian dollar continues to have a quiet week. AUD/USD is trading at 0.6804 in the European session, up 0.09% today at the time of writing. Consumer spending in Australia has been weak, which has chilled economic activity. Retail sales for July didn’t provide any relief with a reading of zero, shy of the market estimate of 0.3% and well off the June gain of 0.5%. Consumers continue to feel squeezed by elevated interest rates and the high cost of living. The weak economy and a cooling labor market are making consumers even more cautious about discretionary spending. Will today’s soft data prod the Reserve Bank of Australia to consider a rate cut? The RBA is frustrated with the slow decline in inflation - Governor Bullock has said that the central bank is unlikely to cut for six months and RBA members have been discussing a possible rate hike at recent meetings. The markets are marching to a different tune and have priced in a rate cut in November with more cuts early next year. The remaining tier-1 events ahead of the Sept. 24 policy meeting are GDP and the employment report and both releases will be important factors in the rate decision. If these numbers are weaker than supported, it would support the case for a rate cut before year’s end. The week wraps up with the US Core PCE Price index, considered the Federal Reserve’s preferred inflation indicator. The markets are expecting a small increase in July – from 2.5% to 2.6% y/y and 0.1% to 0.2% m/m. A small move is unlikely to concern the Fed, which has shifted its focus to the weakening labor market now that the battle with inflation is largely over. AUD/USD is testing resistance at 0.6808. Above, there is resistance at 0.6822 0.6776 and 0.6754 are providing support
by OANDA
Canadian dollar jumps on retail sales reboundThe Canadian dollar is showing some strength on Friday. In the North American session, USD/CAD is trading at 1.3532 at the time of writing, down 0.60% on the day. The Canadian dollar is at its highest level since early April and is poised to post its third winning week in a row. Canada’s retail sales report was a mix. In June, retail sales fell 0.3% m/m, confirming the initial estimate and following a May reading of -0.8%. However, the initial estimate for July jumped 0.6%, which would indicate a much-needed rebound in consumer spending. Retail sales were down 0.5% in the second quarter and 0.4% in Q1, which would mark the weakest two quarters since 2009, outside the covid pandemic. The spike in July is likely due to the Bank of Canada’s quarter-point rate cuts in June and July, bringing down the benchmark rate to 4.5%. The BoC is expected to continue to trim rates as inflation has eased and the labor market shows signs of decline. The annual Jackson Hole meeting has begun and the highlight of the summit will be today’s speech from the host, Fed Chair Jerome Powell. The markets are all ears, although it would not be a surprise if Powell’s speech is little more than a cautious acknowledgment that inflation is moving in the right direction and that the Fed is poised to cut at the Sept. 18 meeting. The markets have fully priced in a rate cut at next month’s meeting, with the odds at 71% for a 25-basis point cut and 29% for a 50-bps cut, according to CME’s FedWatch. There’s a strong chance that the Fed will deliver additional cuts before the end of the year, but recent employment data has been very weak and that could delay further rate cuts. The next employment report on Sept. 6 will be a key factor in determining the Fed’s rate path. USD/CAD has pushed below support at 1.3578 and is testing support at 1.3538. Below, there is support at 1.3478 There is resistance at 1.3628 and 1.3653
by OANDA
Canadian dollar shrugs as Can. CPI drops to 3-year lowThe Canadian dollar is almost unchanged on Tuesday after posting gains over the past two days. In the North American session, USD/CAD is trading at 1.3636 at the time of writing. Canada’s headline CPI rose to 2.5% year-on-year in July, down from 2.7% in June and matching the market estimate. This marked the lowest annual inflation level since March 2021. Monthly, inflation rose to 0.4% in July following a decline in June of -0.1% and in line with the market estimate. The jump in the monthly report was driven by higher gasoline prices. Core CPI, which is more closely monitored by the Bank of Canada, also eased. The average of two of the Bank of Canada’s (BOC) core measures of inflation eased slightly to 2.55% year-on-year in July, compared to 2.7% in June. The decline in inflation is an encouraging sign for the BoC, which would like to continue trimming interest rates as the economy cools and also provide relief to homeowners who are struggling with high rates. The Bank of Canada meets on September 4 and is mindful that the Federal Reserve is almost certain to lower rates, perhaps by a half-point. This means that BoC policy makers don’t have to worry that another rate cut would hurt the Canadian dollar if the Fed follows suit with its own rate cut. The Federal Reserve will almost certainly lower rates at the September meeting, with uncertainty as to the size of the expected reduction. The probability of a 25-basis point cut stands at 75% and a 50 bps cut at 25%, according to the CME’s FedWatch. On Friday, Jerome Powell will address the Jackson Hole Symposium and could signal what the Fed has in store for next month’s meeting. USD/CAD tested support at 1.3614 earlier. Below, there is support at 1.3594 There is resistance at 1.3650 and 1.3670
by OANDA
Canadian dollar rallies, jobs report loomsThe Canadian dollar has shined this week, posting gains over the past four days and rising 1%. Will the impressive rally continue? In the North American session, USD/CAD is trading at 1.3732, unchanged on the day. Canada wraps up the week with the July employment report. The June report was soft, with job growth coming in at -1.4 thousand, a rare decline. The markets are expecting strong turnaround today, with an estimate of 26.9 thousand. The flip side is that the unemployment rate is expected to nudge up to 6.5%, compared to 6.4% in June. If the employment report is a mix as expected, it will be interesting to see how investors respond. The Bank of Canada will be watching closely as it looks to the next meeting on September 4. The BoC has led the recent global trend of lowering rates, having trimmed rates by a quarter-point at each of the past two meetings. If the labour market shows further signs of cooling, it will support the case to lower rates again, perhaps as early as September. The Federal Reserve is virtually guaranteed to cut rates when its meets on September 18 and this will make it easier for the BoC to cut without putting downward pressure on the Canadian dollar. In the US, weaker economic data and the meltdown in the global stock markets has raised expectations of a half-point cut from the Fed in September. The probability of that scenario, only 3% a month ago, has soared to 54.5%, according to the CME’s FedWatch. The market slide led to calls for an emergency rate cut, but the US stock market has rebounded this week. Still, there is an uneasy calm as fears persist that the US economy is showing signs of deteriorating quickly and the sell-off could reignite if the US posts weak data. 1.3746 is a weak resistance line, followed by 1.3809. There is support at 1.3704 and 1.3679
by OANDA
USD/CAD unmoved by Bank of Canada rate cutThe Canadian dollar is almost unchanged on Wednesday, after the Bank of Canada cut rates at today’s meeting. In the North American session, USD/CAD is trading at 1.3778, up 0.05% on the day at the time of writing. The Bank of Canada lowered rates by 25 basis points, bringing the key interest rate to 4.50%. The markets had priced in a rate cut at close to 90%, so the move was widely expected and the Canadian dollar has shown almost no reaction. The BoC has now lowered rates in two straight meetings, as economic data has supported a shift in policy. Headline and core CPI have fallen within the 1-3% target band and monthly CPI posted its first decline since December 2023. The central bank expects the downtrend in inflation to continue in the second half of the year and that inflation will fall to the 2% by 2025. As well, the unemployment rate has risen to 6.4%, up from 5.7% in January. The labor market has performed well under the weight of steep interest rates but is showing cracks. BoC Governor Macklem said after the meeting that if inflation continues to fall as the Bank expects, “it is reasonable to expect further cuts in our policy interest rate”. This is a strong signal that further rate cuts are coming, barring any unpleasant surprises from inflation. There is still more work for the BoC to do, but it is unlikely to cut rates again before the Federal Reserve does so, as further widening of the US/Canada rate differential will weaken the Canadian dollar. The markets have priced in a Fed cut in September at above 90%. USD/CAD has support at 1.3774 and 1.3703 There is resistance at 1.3820 and 1.3891
by OANDA
USD/CAD steady as job growth falls in Canada, USThe Canadian dollar is showing little movement on Friday. In the North American session, USD/CAD is trading at 1.3618, up 0.05% on the day. Canada and the US released employment data today and surprisingly, the Canadian dollar has showed almost no reaction. Canada’s labor market contracted in June, with a decrease of 1.4 thousand. This follows a gain of 26.7 thousand in May and was well below the market estimate of a 22.5 thousand gain. The unemployment rate rose to 6.4%, up from 6.2% in May and higher than the market estimate of 6.3%. At the same time, wage growth climbed 5.6% in June, up from 5.2% and the 5.3% market estimate. The Bank of Canada will be pleased with the weaker job data but the sharp increase in wages could complicate plans to lower interest rates. The BoC cut rates in June for the first time since March 2020, the first major central bank to do so. The Bank wants to see a further cooling of the economy and lower inflation before it feels confident delivering a second rate cut. The US economy added 206 thousand jobs in June, beating the market estimated of 190 thousand. The May reading was revised sharply lower from an initial 272 thousand and the April data was also revised lower. This indicates that the labor market is weakening and could set up a quarter-point rate cut in September. Federal Reserve officials remain cautious about shifting rate policy and have stressed that a rate cut will have to wait until they are confident that inflation will continue to move sustainably towards the 2% target. New York Fed President John Williams echoed this stance on Friday, saying that the Fed had lowered inflation significantly but “we still have a way to go to reach our 2% target on a sustained basis”. The Fed may be in a cautious mood but the markets are becoming more confident of a September cut. The odds have risen to 72% following today’s employment release, up from 68% immediately before the release and just 58% one week ago, according to the CME’s FedWatch. USD/CAD is testing resistance at 1.3621. Above, there is resistance at 1.3656 There is support at 1.3600 and 1.3586
by OANDA
NZDCAD: Policy Divergence Favoring the KiwiHello Traders, In today's trading session, we are keeping a close watch on NZDCAD for a promising buying opportunity around the 0.83900 level. After experiencing a prolonged downtrend, NZDCAD has successfully broken out and is currently in a correction phase. This correction is bringing the pair closer to a critical support and resistance zone at 0.83900, making it a prime area for potential buy entries. The ongoing policy divergence between the Reserve Bank of New Zealand (RBNZ) and the Bank of Canada (BoC) adds an extra layer of favorability for the NZD over the CAD. The RBNZ's more accommodative stance compared to the BoC's policies provides a supportive backdrop for the NZD, further bolstering the case for a buying opportunity at this level. Trade safely, Joe
Long
by JoeChampion
3
NZD/CAD: Capitalizing on RBNZ Stability and BoC DovishnessHello Traders, In the coming week, we are closely monitoring NZD/CAD for a potential buying opportunity around the 0.84090 zone. NZD/CAD is currently trading in an uptrend and is undergoing a correction phase, bringing it closer to the key support and resistance area at 0.84090. This level has historically served as a significant pivot point for price action, making it an attractive entry point for long positions. From a fundamental perspective, the Reserve Bank of New Zealand (RBNZ) is maintaining a steady stance and is not looking to cut rates anytime soon. In contrast, the Bank of Canada (BoC) seems to be on pace to cut rates, given the easing inflationary pressures in Canada. This divergence in monetary policy favors the NZD over the CAD, adding strength to our bullish outlook on NZD/CAD. Additionally, the overall bullish sentiment in the stock market could further benefit NZD/CAD due to the positive correlation between risk-on environments and NZD strength. This confluence of technical and fundamental factors makes the 0.84090 zone a strategic area to look for buying opportunities in NZD/CAD. Trade safely, Joe
Short
by JoeChampion
11
USDCAD: Thoughts and AnalysisToday's focus: USDCAD Pattern – Heavy Resistance Support – 1.3514, 1.3454 Resistance – 1.3602 Hi, traders; thanks for tuning in for today's update. Today, we are looking at USDCAD daily. What are we discussing and asking today after looking at USDCAD? Will current heavy resistance contnue to block buyers? Does price have enough momentum in its current bull channel? Will this week's data and news be enough of an influence to set off a new break lower or higher? Key news, US CPI, PPI, Fed meeting minutes. Canadian interest rate decision. Good trading.
by Eightcap
USD/CAD edges lower on strong Canadian GDPThe Canadian dollar is slightly higher on Thursday. USD/CAD is trading at 1.3537 in the North American session, down 0.23%. Canada’s GDP bounced back with a strong gain of 0.6% m/m in January, after a 0.1% in December. This beat the market estimate of 0.4%. The preliminary estimate for February’s GDP stands at 0.4%, which means that so far, growth in the first quarter is looking solid. This is a major turnaround for the Canadian economy, which narrowly avoided a technical recession in the second half of 2023. The Bank of Canada meets next on April 10th and the improvement in GDP would support the BoC taking its time before cutting rates. The BoC has held the benchmark rate at 5% six straight times and is looking for the economy to cool and inflation to fall further before it lowers rates. At the same time, households are groaning under the weight of high interest rates, which is putting some pressure on the BoC to provide some relief by lowering rates. The US also released GDP for the fourth quarter, with the third and final estimate being revised upwards to 3.4% y/y, up from 3.2% in the second estimate and beating the market estimate of 3.2%. The GDP release was respectable but sharply lower than the 4.9% gain in Q3, which indicates that the US economy is cooling down due to elevated interest rates. The Federal Reserve has sounded more hawkish about rate policy lately. Fed Governor Christopher Waller said on Wednesday that inflation had not fallen as quickly as expected and “there is no rush to cut the policy rate”. Earlier in the week, Atlanta Fed President Rafael Bostic lowered his forecast to just one rate cut in 2024, after saying in February that he expected two rate cuts this year. USD/CAD is testing support at 1.3559. Below, there is support at 1.3503 1.3661 and 1.3717 are the next resistance lines
by OANDA
CADJPY: Next stop the monthly falling trendline?There's not much in the way of this move from what I can see. Yen continues to be the weakest currency in the G10 (for now, BoJ look set to intervene at some point this year) and for the short term I expect this to continue to meet the descending long-term trendline that's formed. I'll be looking for sells around 115 with any LTF confirmation, but until then I'm going to be doing some long scalps not that local resistance has been broken and retested.
Long
by Finchcliffe
USD/CAD muted after mixed retail sales reportThe Canadian dollar is drifting on Friday. In the European session, USD/CAD is trading at 1.3468, down 0.1%. With no tier-1 events on the data calendar, we can expect a quiet day for the Canadian dollar. Canada’s retail sales report on Friday was a mixed bag. Consumers sharply reduced their spending in January following better-than-expected retail sales in December. Let’s start with the good news. The end of 2023 saw strong consumer spending, with a gain of 0.9% m/m in December, revised upwards from 0.7% and beating the market estimate of 0.8%. The increase was led by higher sales for motor vehicles, fuel and food. In the fourth quarter, retail sales rose by a respectable 1%. The news was not nearly as positive in January. The preliminary estimate of -0.4% m/m points to a sharp pullback in consumer spending. The slowdown in retail activity in January could continue as more householders renew their mortgages at higher rates, leaving less money for discretionary spending. The Bank of Canada has repeatedly stated that rate decisions will be data-dependent, and we’ll have to wait and see what BoC policy makers make of the mixed retail sales release. Canada releases December GDP next week, followed by the BOC rate decision on February 29. Three top Federal Reserve officials reiterated on Thursday that the Fed is planning to lower interest rates this year but not just yet. Fed Vice Chair Philip Jefferson and Governors Lisa Cook and Christopher Waller said that inflation was headed in the right direction but urged patience. In December, the markets had priced in a rate cut in March at over 70% but that has dissipated to just 2.5% currently, according to the CME FedWatch tool. The strong US economy and constant pushback from the Fed against rate cuts in March have forced the markets to look ahead. Investors have currently priced in a 65% chance of a rate cut in June, compared to 74% just one week ago. USD/CAD is testing support at 1.3477. Below, there is support at 1.3446 1.3514 and 1.3545 are the next resistance lines
by OANDA
USD/CAD drifting ahead of FOMC minutesThe Canadian dollar is trading quietly on Wednesday. In the North American session, USD/CAD is trading at 1.3517, down 0.07%. Investors are anxiously awaiting the release of the minutes of the Fed’s January meeting later today, hoping for some insights about the Fed’s future interest rate path. The markets had priced in a March cut after the Fed signaled in December that it would cut rates. These expectations have been slashed, however, as the Fed has pushed back against expectations of a March cut and economic data has been stronger than expected. The markets are now eyeing the June meeting for a rate cut. Canada’s inflation rate dropped to its lowest level since June 2023 but the Canadian dollar showed little interest. Headline CPI declined to 2.9% y/y in January, down from 3.4% in December and below the market estimate of 3.3%. This marks the first time that inflation has fallen within the Bank of Canada’s target range of 1%-3% since June 2023. The main drivers of the decline in the headline reading were sharp drops in the price of fuel and food. Core inflation, which excludes fuel and food, showed a modest decline in January. The average of two of the Bank of Canada’s core measures of inflation came in at 3.35% in January, below the December gain of 3.6%.- The decline in inflation is an encouraging sign for the Bank of Canada. Still, both the headline and core readings are well above the BoC’s goal of 2% inflation, which is the midpoint of the target range. Traders should keep in mind that inflation has been zigzagging , as it rose unexpectedly in December and fell more than expected in January. As analysts like to say, inflation does not move in a straight line. This leaves BoC policy makers with some uncertainty as to where inflation is headed, but what is clear is that a rate cut is very unlikely until the BoC is convinced that inflation is on a downward trend. USD/CAD is putting pressure on support at 1.3500. Below, there is support at 1.3415 1.3571 and 1.3656 are the next resistance lines
by OANDA
USD/CAD dips as Canadian employment shinesThe Canadian dollar has climbed higher in the North American session after the release of Canada's December employment report. In the North American session, USD/CAD is trading at 1.3432, down 0.20%. Canada usually posts employment reports on the same Friday as the US, but had the stage all to itself today, as the US posted its job report last week. The news was good as employment jumped by 37,300 in January, smashing the market estimate of 15,000. The December reading was revised upwards to 12,300 from the initial estimate of just 0.1 thousand. The unemployment rate ticked lower to 5.7%, down from 5.8% in December and below the market estimate of 5.7%.  As well, average hourly earnings eased to 5.3% y/y in January, compared to 5.7% a month earlier. The Bank of Canada will be carefully monitoring the jobs data. Employment growth jumped, which points to a stronger labour market, but at the same time wage growth dropped. Wages are a key driver of inflation and today's decline will support the BoC continuing to pause and not cut rates until the middle of the year or later. The BoC is content to continue its "higher for longer" stance and let high rates continue pushing inflation lower. The central bank's top priority remains bringing down inflation to the 2% target, but businesses and consumers, especially homeowners, are groaning under the weight of elevated rates and are looking for some relief from the BoC. The Federal Reserve continues to push back against rate cut expectations in March. This week, a host of Fed members delivered the message that inflation is heading lower but the Fed remains cautious and isn't yet ready to lower rates, as the battle against inflation is not yet won. The markets have taken note of the Fed’s pushback and have pared expectations of a rate cut in March to 17%, down from over 70% in December, according to the CME’s Fed Watch tool. USD/CAD tested support at 1.3434 earlier. Below, there is support at 1.3392 1.3509 and 1.3551 are the next resistance lines
by OANDA
USD/CAD eyes Bank of CanadaThe Canadian dollar is showing limited movement on Wednesday. In the North American session, USD/CAD is trading at 1.3436, down 0.19%. The Bank of Canada will announce its first rate decision of 2024 later today. The BoC has maintained the cash rate at 5.0% for three straight times and barring further acceleration in inflation, the rate-tightening cycle is over. The key question is the timing of a rate cut. The BoC would love to chop rates and kick-start the weak economy, but a rate cut appears unlikely unless inflation moves closer to the 2% target. We've seen the Federal Reserve grapple with the "last mile" of the inflation battle, as inflation remains stubborn in the range of 3-4%, higher than the 2% target. The BoC has managed to push inflation down from a high of 8.1% in mid-2022 but rose slightly in December to 3.4%. Inflation is currently driven by services and housing costs, which are unlikely to fall considerably in the near term. This means that further rate hikes may not be effective in pushing inflation lower. The BoC has little reason to raise rates, but it is reluctant to start cutting rates while inflation remains well above the target and wage growth is still high. That leaves BoC policymakers with a strong reason to continue holding rates and remaining cautious until inflation moves closer to the 2% target. When can we expect the BoC to hit the rate-cut button? Two of Canada's major banks, RBC and BMO, expect a rate cut in mid-2024, while TD Bank is projecting an initial rate cut in the spring. USD/CAD is testing support at 1.3451. Below, there is support at 1.3360 There is resistance at 1.3520 and 1.3611
by OANDA
Canadian dollar drifting ahead of CPI releaseThe Canadian dollar is showing little movement on Tuesday. In the European session, USD/CAD is trading at 1.3382, down 0.13%. We could see stronger movement from the Canadian dollar in the North American session, with the release of the Canadian inflation report. Canada releases the November inflation report later on Tuesday. In October, inflation dropped to 3.1% y/y, down sharply from 3.8%. The market consensus for November stands at 2.9%. Two key core inflation indicators are expected to ease to an average of 3.3%, down from an average of 3.5% in October. A further drop in inflation would be an encouraging sign for the Bank of Canada, which has raised the cash rate to 5.0% but has paused three straight times. The BoC remained hawkish at the December meeting and kept the door open to additional rate hikes but the markets are convinced that the rate-tightening cycle is over and have priced in rate cuts next year, starting in mid-2024. A drop in the November inflation report would bolster expectations for rate cuts next year. If inflation surprises on the upside, it would bolster the Canadian dollar and force the BoC to continue pausing rates at restrictive levels ('higher for lower'). The US dollar has hit a rough patch since the Fed meeting last week when Fed Chair Powell penciled in three rate cuts next year. Traders are far more bullish and have priced in six rate hikes in 2024, starting in March. We're seeing some pushback from the Fed to dampen rate-cut fever in the markets. On Friday, New York Fed President John Williams said a rate cut in March was "premature" and even warned that rates could move higher if inflation were to stall or reverse. Cleveland Fed President Mester said on Monday that the markets are a "bit ahead" of the Fed on rate cuts, as the Fed was focused on how long it would need to maintain rates in restrictive territory, while the markets were focused on rate cuts. USD/CAD is testing support at 1.3363. Below, there is support at 1.3327 There is resistance at 1.3386 and 1.3422
by OANDA