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May 2nd - According to foreign media reports, the German auto industry is calling for an immediate de-escalation of the tariff dispute between the US and the EU, and demanding that both sides begin negotiations immediately. Trump previously stated that he would raise tariffs on EU cars to 25%, claiming that the EU had failed to fully comply with the trade agreement negotiated with the US. Hildegard Müller, president of the lobbying group German Association of the Automotive Industry, said in an emailed statement on Saturday: "The US-EU trade agreement must be mutually respected. This also means that the EU must finally approve its due portions of the agreement reached last summer." A spokesperson stated that the EU is fulfilling its commitments according to standard legislative procedures and has consistently provided full information to the US administration. The spokesperson added that the European Commission will seek a clear explanation from the US while reserving various options to protect EU interests.Ukrainian President Zelensky: It is very important to know that Slovakia supports Ukraines accession to the European Union and is willing to share its experience in accession.Ukrainian President Zelensky: I spoke with the Slovak Prime Minister. We need to strengthen bilateral relations, and both sides are very interested in this.On May 2nd, a spokesperson for the Ministry of Commerce stated that the Chinese government consistently opposes unilateral sanctions lacking UN authorization and a basis in international law. This ban is a concrete action to implement the "Measures for Blocking the Improper Extraterritorial Application of Foreign Laws and Measures," and it does not affect Chinas undertaking and fulfillment of its international obligations, nor does it affect Chinas protection of the legitimate rights and interests of foreign-invested enterprises in accordance with the law. The Ministry of Commerce will continue to closely monitor situations involving the improper extraterritorial application of laws and measures by relevant countries. If any circumstances stipulated in the "Measures for Blocking the Improper Extraterritorial Application of Foreign Laws and Measures" exist, relevant work will be carried out in accordance with the law.On May 2nd, in response to US President Trumps threat to raise tariffs on EU cars imported into the US next week, a spokesperson for the European Commission stated that the EU will "reserve all options" and assess possible follow-up measures. The spokesperson also stated that the EU is implementing relevant trade agreements according to normal legislative procedures and is continuously informing the US of progress.

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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