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Futures News, May 15th: 1. Widespread Precipitation Expected in Central and Eastern China: From May 15th to 19th, a large-scale rainfall process will occur in central and eastern my country from west to east. Heavy rain or torrential rain is expected in parts of eastern Southwest China, the Jianghuai region, central and western Jiangnan, South China, eastern Northwest China, western and northern North China, the Huanghuai region, and Inner Mongolia, with localized areas experiencing extremely heavy rain, accompanied by thunderstorms, strong winds, and short-duration heavy precipitation. 2. Dense Fog Expected in the Yellow Sea and Northern East China Sea: From 08:00 on May 15th to 08:00 on May 16th, dense fog with visibility less than 1 kilometer is expected in the Bohai Strait, most of the Yellow Sea, northwestern East China Sea, eastern coastal waters of the Liaodong Peninsula, eastern coastal waters of the Shandong Peninsula, and coastal waters of Jiangsu. Additionally, from early morning to late morning on May 15th, dense fog is expected in parts of central Hunan, central Jiangxi, southern Sichuan Basin, and western Guizhou, with localized areas experiencing dense fog with visibility less than 500 meters. The National Meteorological Center continued to issue a yellow fog warning at 06:00 on May 15. 3. High temperatures will persist in central and northern Africa, West Asia, and South Asia. Over the next three days, parts of central and northern Africa, southeastern Arabian Peninsula, southeastern Iran, southwestern Afghanistan, southern Pakistan, and most of India will experience temperatures above 40℃, with some areas exceeding 45℃. 3. Significant rainfall is expected in central and eastern Southern Europe. Over the next three days, influenced by an upper-level trough and low-level Mediterranean moisture transport, parts of Croatia, Bosnia and Herzegovina, Montenegro, central Italy, Albania, western Romania, eastern Czech Republic, Slovakia, Hungary, North Macedonia, and Bulgaria will experience moderate rain, with some areas experiencing heavy to torrential rain; these areas will also experience winds of force 4 to 6, with gusts exceeding force 7.On May 15th, South Korean Finance Minister Koo Yoon-cheol stated that despite continued strong export data, the protracted conflict in the Middle East is gradually impacting the South Korean economy through rising consumer prices, and the government will take proactive measures to stabilize supply chains. According to the Ministry of Strategy and Finance, Koo chaired a meeting of economic ministers in Seoul that day to discuss countermeasures against the economic impact of the Middle East geopolitical crisis. The Ministry of Finance quoted Koo as saying, "The protracted war has begun to have a significant impact on South Koreas real economy and peoples lives." Koo also expressed gratitude to gas stations for cooperating with the governments fuel price cap mechanism, noting that current market fuel prices are still below the cap level. He added that South Korea will closely assess changes in the economic environment, including the semiconductor industry boom, and study measures to alleviate economic polarization. The Ministry of Finance stated that South Korea will announce its economic growth strategy for the second half of the year at the end of June. In addition, Koo also chaired a meeting of real estate ministers, stating that the government will use all available means to stabilize the real estate market.Data from the Bank of Japan shows that the year-on-year increase in the yen-denominated import price index in April was the fastest since December 2022.Japans corporate goods price index rose 2.3% month-on-month in April, below the expected 0.80% and the previous reading of 0.80%.Japans corporate goods price index rose 4.9% year-on-year in April, below the expected 3.00% and the previous reading of 2.60%.

USD/CAD Trades at a Flat Level Following Volatile Trading and Rising US Treasury Yields

Drake Hampton

Apr 06, 2022 10:16

Insights

  • The dollar fell as additional penalties against Russia weighed on the Loonie.

  • Benchmark rates increased as the Federal Reserve pursued a more aggressive rate hike strategy.

  • Due to the new penalties, gold and silver prices remained rather stable.

  • As European countries ponder further measures, oil prices continue to rise.

 

Despite a volatile trading session, the dollar maintained its strength as higher oil prices bolstered the commodity-linked Loonie. The yield on ten-year government bonds increased to 2.56 percent, the highest level since May 2019. Benchmark rates increased several basis points following Fed Governor Brainard's statement that the Fed must pursue a more aggressive stance to contain inflation. Commodity-linked currencies such as the Loonie increased in value as a result of higher oil prices and good economic indicators. New sanctions against Russia continue to benefit silver and gold prices. On the potential of fresh Russian sanctions, oil prices continued to increase. Investors are awaiting the release of the minutes from the most recent FMOC meeting on Wednesday.

 

Today, the US released its February trade balance. Actual balance of -$89.2 billion was lower than predicted at -$88.5 billion. The reading stayed relatively stable compared to the previous month, indicating a record deficiency. Exports increased by 1.8%, while imports jumped by 1.3 percent. In the following months, the Russia-Ukraine war may limit demand for US exports.

Technical Evaluation

The USD/CAD exchange rate remained unchanged following a recovery from the downward pressure caused by increased oil prices, which supported the Loonie. However, losses should be contained as a result of the Fed's more aggressive rate hikes. The pair remains below the key level of 1.25 and may be driven lower as additional penalties against Russia increase. Resistance is located near the 10-day moving average, which is now at 1.25. Near today's lows near 1.24, support is seen. A break below support would reveal the daily low of 1.2387 from November 10th, signaling further downward pressure. The short-term momentum shifted to the upside when the fast stochastic crossed above the buy signal.

 

Although the MACD line generated a crossover sell signal, the medium-term momentum is negative but favorable. When the MACD line (the 12-day moving average minus the 26-day moving average) passes the MACD signal line, this scenario occurs (the 9-day moving average of the MACD line).

 

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