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August 26th - As markets closely watch for clues about the timing of the Bank of Japans next interest rate hike, BOJ watchers will be closely monitoring Deputy Governor Ryozo Himinos speech on Thursday. SMBC Nikko Securities strategist Ataru Okumura stated, "While there are limitations to how much a single speech by a BOJ deputy governor can guide market expectations, the focus will be on how firm his wording is on controlling inflation." Okumura added that although the bond market firmly expects the BOJ to raise rates sooner rather than later, investors doubt the banks ability to push rates above the restrictive level of 2%, making the future path of interest rates a key focus for the market.August 26th - According to the Financial Times, US Treasury Secretary Bessetts intervention in the bond market runs counter to the Federal Reserves efforts to curb inflation. Bessetts unexpected intervention in the US Treasury market caused yields to initially fall before rising, triggering a market reaction that puts greater pressure on Warshs speech in Jackson Hole on Friday. Warsh has consistently emphasized that investors should rely more on economic data and market prices rather than waiting for "forward guidance" from central bank officials to tell the market about future interest rate trends. There are now concerns that if Bessetts efforts to control yields remain ineffective, the Federal Reserve may also face pressure to intervene in the market. Warsh and Bessett are both protégés of billionaire Stanley Druckenmiller, and the two reportedly have a close relationship and meet frequently. However, the current impression is that their respective Treasury departments and the Federal Reserve are "moving in opposite directions."ECB Executive Board member Schnabel: At the current policy rate, inflation is unlikely to return to the target level in the medium term, and further tightening of policy will be necessary.ECB Executive Board member Schnabel: The risks to economic growth are slightly tilted to the upside.ECB Executive Board member Schnabel: Given the resilience of the economy, interest rates must be raised further.

Despite decreased oil prices, USDCAD fights above 1.3400; news on the US midterm elections is in focus

Daniel Rogers

Nov 09, 2022 17:59

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Amid tumultuous market conditions, the USDCAD is trading near 1.3450 ahead of Wednesday's European session. In addition to covid concerns from China and a cautious disposition before of significant data/events, the closure of the United States government has restricted the Loonie pair's recent fluctuations.

 

However, weakening prices of Canada's principal export, especially WTI Crude Oil, support USDCAD bulls. As of press time, the energy benchmark has decreased for three consecutive trading days, falling 0.85% intraday to approximately $87.75.

 

Aside from this, the US Dollar Index (DXY) shows small increases near 109.70 despite mounting fears of a US government deadlock due to the outcomes of the most recent election. In addition to articles anticipating a six-month high in China's covid rate and additional virus-driven lockdowns, the market's concerns and the USDCAD exchange rate may be heightened.

 

S&P 500 Futures struggle to replicate Wall Street's advances, as US 10-year Treasury rates stay bearish despite breaking a four-day downturn the previous day.

 

The uncertainty around Thursday's US Consumer Price Index (CPI) for October and a speech by the Governor of the Bank of Canada (BOC), Tiff Macklem, provides a challenge to pair purchasers, it should be noted. Recent inconsistent US numbers and Fedspeak, as well as the BOC's delaying of rate hikes, may be to blame.

 

A one-week-old descending trend line depicts the current USDCAD decline. The bearish MACD signal and the obvious breach of the preceding support line from the beginning of October also provide sellers with optimism. In addition, the bearish picture is strengthened by the pair's continued trading below the 200-SMA.


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