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Hang Seng Index futures closed up 0.39% at 19,924 points in the night session, 145 points higher.On January 23, BlackRock CEO Larry Fink said that investors were too quick to conclude that high inflation was over, increasing the likelihood that bond yields will rise in the future as prices rise. "The biggest risk facing the world today is that the whole world believes that the peak of inflation has passed," Fink told Bloomberg on Wednesday while attending the World Economic Forum in Davos, Switzerland, saying that his views were at odds with the views expressed by market forces. "I really think we will face a situation of high inflation." When talking about artificial intelligence investment, Fink said that building data centers requires a lot of funds from the private sector. BlackRock is teaming up with Microsoft and others to raise a $30 billion fund, and Fink said that the private market needs to pay special attention to how data centers are powered. "In the short term, lets be clear that it will be powered primarily by natural gas, natural gas in the United States," Fink said, adding that electricity demand should trigger discussions about the future role of nuclear energy.On January 23, the European Stoxx 600 index hit a record high for the first time since September, as investors became increasingly confident that the United States might not implement the most severe tariff measures it had previously threatened. The index rose 0.9% to 530.55 points during the session, exceeding the previous intraday high of 528.68 points in September. However, the index later gave up most of its gains and closed at 528.04. Consumer goods and technology stocks rose the most on Wednesday, with Adidas shares jumping after announcing better-than-expected earnings. European stocks have regained favor this month after experiencing one of the worst years compared to U.S. stocks in 2024. Political uncertainty is also expected to subside this year after Germany holds a general election.On January 23, according to the Japan Meteorological Agency, at about 2:49 a.m. local time on the same day, a 5.0-magnitude earthquake occurred in the Aizu area of Fukushima Prefecture, Japan, with a maximum tremor of 5 weak and a focal depth of 10 kilometers. There is no risk of tsunami from this earthquake. At about 2:57 a.m. local time on the 23rd, a 3.2-magnitude earthquake occurred again in the Aizu area of Fukushima Prefecture, Japan, with a maximum tremor of 3 and a focal depth of 10 kilometers.The bid-to-cover ratio for the U.S. 20-year Treasury bond auction on January 22 was 2.75, compared with the previous value of 2.50.

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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