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July 6, Lloyds Bank of the United Kingdom believes that the minutes of the Federal Reserves June meeting to be released next Wednesday are not expected to change the markets expectation that interest rates will remain unchanged at the July meeting, and interest rate adjustments are more likely to take place in September. The Feds dot plot is still expected to have two rate cuts this year, but there are clear differences among policymakers, ranging from three rate cuts to unchanged.According to TASS: Russian troops have taken control of Sobolivka in the Kharkiv region of Ukraine and Piddubne in the Donetsk region.According to Nikkei News: Nissan Motor is considering having Foxconn produce electric vehicles at its Oppama plant in Okinawa, Japan.On July 6, the new South Korean Prime Minister Kim Min-seok hosted the first high-level party-government consultation meeting of the Lee Jae-myung government at the Prime Ministers Residence in Samcheong-dong, Jongno-gu, Seoul on the afternoon of the 6th. He pointed out that the current government was born in the "Light Revolution" and there is no handover committee, nor a policy adjustment period. The current cabinet is still under construction. In order to promote national recovery, the government and the ruling party should work together and go all out with the belief of saving the country and the people.Qatar set the August shipping price of marine crude oil at a premium of $1.40 per barrel over the Oman/Dubai average price; the shipping price of land crude oil was set at a premium of $1.30 per barrel over the Oman/Dubai average price.

Canadian Dollar Outlook: CAD Extends Rally After Yesterday’s BoC Decision

Cory Russell

Apr 15, 2022 10:55

USD/CAD FUNDAMENTAL BACKDROP

The USD/CAD exchange rate began lower this morning as a result of lower US Treasury rates (a lower expectation for US inflation) and a weaker dollar. The Bank of Canada's (BoC) 50 basis point rate boost yesterday spurred a CAD surge, clawing back recent losses. In the long run, though, I prefer the dollar because I don't believe the Canadian economy can keep up with the Fed's aggressive policy. As we go through the rightening cycle, the dollar should strengthen versus the loonie.


Crude oil prices are still high, but their impact on the USD/CAD has lessened since the US is now a net crude oil producer. This can be seen in the USD/CAD price movement, where the CAD has been relatively quiet in comparison to prior crude oil price increases.


We have a couple option expiries for the New York cut later today (see details below). As the cut approaches, prices on huge expiries tend to approach the strike price. USD/CAD is now slightly higher than the below strikes, suggesting a move down later in the day.


1.2550 (289M) USD/CAD, 1.2560-70 USD/CAD (923M)


USD/CAD ECONOMIC CALENDAR As we move into the Easter weekend, retail sales and consumer confidence in the United States will round off the week, while Canadian inflation will take center stage next week.

TECHNICAL ANALYSIS

USD/CAD seems to be headed for a retest of the psychological support level of 1.2500, which is part of a building bear flag. This gloomy prognosis is definitely plausible in the short term, but as I have said, USD upside is my favored strategy after Q2.

IG CLIENT SENTIMENT DATA: MIXED

Retail traders are now significantly LONG on USD/CAD, according to IGCS, with 62 percent of traders holding long bets (as of this writing).