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The yield on German two-year government bonds fell to a seven-week low of 2.508% after the release of the European Central Banks consumer expectations survey, down 3 basis points on the day.On June 26th, Fitch Ratings BMI Commodities Research division remained bullish on gold, maintaining its 2026 average gold price forecast of $4,600 per ounce. The firm also believes the Federal Reserve will not make any moves on interest rates this year. As noted last week, the Feds hawkish tone has fueled expectations of rate hikes, posing a significant downside risk to gold. However, as long as inflationary pressures related to the Middle East conflict materialize as expected, and with the recent US-Iran agreement beginning to subside, the most likely outcome is that interest rates will remain unchanged for an extended period. Short-term gold price movements may be driven by Fed policy signals, and precious metals are susceptible to market expectation repricing and a renewed strengthening of the US dollar in the short term.June 26th - A survey released by the European Central Bank (ECB) on Friday showed that eurozone consumers lowered their inflation expectations for the next year in May, while long-term expectations remained stable. This indicates that the ECB is not facing pressure to raise interest rates again quickly. Some ECB policymakers said that further tightening of monetary policy is still needed to curb inflation expectations, but there is still considerable disagreement within the ECB regarding the timing of the next move. The ECB consumer expectations survey showed that consumers expectations for inflation over the next year fell from 4.0% in April to 3.5% in May; their expectations for inflation over the next three and five years remained unchanged at 2.9% and 2.4%, respectively. Based on a survey of approximately 19,000 adults in 11 eurozone countries, the ECB stated: "Uncertainty about inflation expectations over the next 12 months has decreased, but remains higher than before the outbreak of the Middle East wars." As in the past, lower-income groups reported higher current inflation perceptions and expectations than other groups, while younger people reported relatively lower inflation perceptions and expectations. Financial markets currently expect the ECB to raise interest rates one or two more times, with the next rate hike not being fully priced in by the market until the fall.European Central Bank: Consumer pessimism about GDP growth prospects has eased.European Central Bank: Revenue growth is expected to reach 1.0% over the next year (previously forecast at 0.8%).

As investors wait for US/Canada employment data, the USD/CAD trading range is limited to 40 pips

Daniel Rogers

Apr 06, 2023 13:36

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The USD/CAD pair retraced below 1.3450 in the early Asian session as the US Dollar Index (DXY) lost upside momentum after reaching the key resistance level of 102.00. As investors anticipate the release of the United States/Canada Employment data, the Canadian dollar is expected to deliver a dazzling performance.

 

As a consequence of a decline in Job Openings and sluggish additions of new positions, as measured by Automatic Data Processing, firms have slackened recruitment efforts, thereby alleviating the tight US labor market. (ADP). This has led to expectations that the Federal Reserve (Fed) will keep interest rates unchanged at its May meeting.

 

In the interim, S&P500 futures have resumed their downward trend, indicating a cautious market sentiment.

 

Employment data will influence the Canadian Dollar. The consensus estimate for Net Change in Employment is 12K, which is a decrease from the previous release of 21.8K. The estimated unemployment rate is 5.1%, up from 5.0% previously.

 

The USD/CAD exchange rate is exhibiting an Inverted Flag pattern on an hourly time frame. The Inverted Flag is a trend-following pattern that consists of a protracted consolidation followed by a decline. Participants prefer to enter an auction after a bearish bias has been established, and current vendors increase their position size during the consolidation phase of a chart pattern.

 

The Canadian dollar was unable to maintain a position above the 50-period Exponential Moving Average (EMA) at 1.3458, indicating that further declines are imminent.

 

Meanwhile, the Relative Strength Index (RSI) (14) has an upper limit of 60.00. A violation of the unfavorable 20.00-40.00 range will trigger downward momentum.

 

A break below the low of April 04, 1.3406, would expose the asset to a fresh six-week low around 1.3350, the low of February 6 followed by round-number support at 1.3300.

 

In an alternative scenario, a move above the psychological resistance of 1.3500 would lend momentum to US Dollar supporters, propelling the asset toward the 31- and 29-March highs of 1.3559 and 1.3619, respectively.


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