Canadian Dollar outperforms as markets turn defensive

Frank Walbaum

Important news this week

Fri, 23rd, various DE/EU/UK/US Purchasing Manager Index.

Canadian Dollar outperforms as markets turn defensive

The Canadian Dollar continues to strengthen against its peers, standing out in an increasingly uncertain market environment. USDCAD remains under pressure, following the broader bearish trend in the US Dollar Index (DXY). However, the weakness in EURCAD suggests that this is not simply a story of US Dollar weakness. The Loonie is showing independent strength across the currency market, making CAD one of the strongest performers to watch. The persistence of this move, despite weaker Canadian economic data, suggests that broader market flows and relative currency demand are currently outweighing domestic fundamentals.

Market talk

Risk sentiment is deteriorating again as equity markets turn lower, with technology stocks leading the decline. The weakness is spreading across asset classes, with cryptocurrencies and metals also under pressure. Within crypto, altcoins are suffering more than Bitcoin, reflecting their greater sensitivity to changing market sentiment.

The broader question is whether this marks the beginning of a more sustained risk-off phase or simply another temporary setback. The Japanese Yen is gaining ground, while AUDUSD remains stuck around its 50-day moving average, highlighting the uncertainty surrounding risk-sensitive currencies. With equity markets struggling to maintain their recovery, Wednesday's price action could prove important in determining the direction for the remainder of the week

Tendencies in the markets

Equities correcting, USD weak, crypto weak, oil positive, metals lower, JPY stronger.

Author

Frank Walbaum

AUD/USD pulls back from monthly high but holds above 0.7000

AUD/USD retreats from the monthly high set earlier this Thursday, sliding back to 0.7000 during the Asian session as a further escalation of tensions in the Middle East undermines the risk-sensitive Aussie. However, recent hawkish comments from RBA officials could support the Australian Dollar. Furthermore, the prevailing US Dollar selling bias, despite Fed hike bets and geopolitical uncertainties, could limit losses for the pair.

USD/JPY declines to a one-week low; eyes trading range support near 157.50 on weaker USD

USD/JPY drops to a one-week low during Thursday’s Asian session, with bears now awaiting a break below multi-week range support near mid-157.00s before placing fresh bets amid a broadly weaker US Dollar. Despite bets for a December Fed rate hike and Middle East jitters, the recent decline in US bond yields keeps USD depressed near a three-week low. Moreover, hawkish BoJ expectations and intervention risks underpin the Japanese Yen, further weighing on the currency pair.

Gold bounces off monthly low as USD selling remains unabated amid falling bond yields

Gold pares heavy intraday losses to the monthly trough, though it retains an intraday bearish tone below $4,100 during Thursday’s early European session. The US Dollar selling bias remains unabated as Federal Reserve officials recently signaled there is no urgency to raise interest rates at the upcoming October 27–28 meeting. Furthermore, US bond yields extend their retracement slide from multi-year highs, keeping USD bulls on the back foot and offering some support to the precious metal.

Dogecoin stays weak despite whales and new deal

Dogecoin price remains under pressure, trading below $0.081 despite a modest rebound earlier this week. Santiment data shows signs of accumulation, and Wednesday’s announcement of a Dogecoin Labs partnership with the Dogecoin Foundation adds a mildly bullish sentiment. Meanwhile, mixed derivatives metrics and weakening momentum indicators continue to limit the meme coin recovery.

Dow Jones Industrial Average climbs with the AI trade, led by a bank

The Dow Jones Industrial Average got most of its share of Wednesday's artificial intelligence (AI) rally from a bank and a bulldozer maker. The index closed near 52,800, its highest close since early September. SpaceX (SPCX) reported 161% revenue growth and the Nasdaq Composite rose more than 1%, but under price weighting the gains that counted most belonged to Goldman Sachs (GS) and Caterpillar (CAT).

The US Dollar fell. Gold didn't rally. That tells you everything

Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.