Canadian Dollar strengthens against partners after statements from Central Bank

Mark O’Donnell Blackbull Markets Limited

On Wednesday, the Canadian Central Bank advised that it will begin lowering the value of its weekly asset purchases. The downgrade is in response to the economy making progress in its recovery. The Bank had previously committed to spending C$4 billion per week. Moving forward, the Bank will spend C$3 billion, starting from next week.

Additionally, the Canadian Central Bank left the nominal interest rate unchanged at 0.25%. However, the Bank noted that it expected to lift the rate sooner than expected following the improved economic outlook. Late 2022 is being targeted as the time that the economy will return to an inflation rate of 2%. The Bank predicts that economic growth for 2021 will be 6.5%, revised up from the previous prediction of 4.0%.

How this news has filtered into the forex market?

USD/CAD

USD/CAD closed down 1.05% within the first 4 hours of the Central Banks announcement.

Moving in for a closer look, we see that the Bearish sentiment has subsided. At the 1 hour, a back and forth has cultivated. However, the Bulls have made some headway in correcting the drop.

As I write, the USD/CAD is currently trading at 1.24982

EUR/CAD

The story is similar over on the EUR/CAD. The CAD weakened by 1.02% immediately after the Central Banks announcement but has since begun to correct itself. Where analysis of the EUR differs from the USD is the presence of a historical point of resistance to indicate that the correction might peter out at 1.504. This level may be the appropriate level for the EUR after the CAD announcement.

As I write, the EUR/CAD is currently trading at 1.50437.

Author

Mark O’Donnell

Blackbull Markets Limited

Mark O’Donnell is a Research Analyst with BlackBull Markets in Auckland, New Zealand.

AUD/USD holds above 0.6950 as bullish USD caps gains

AUD/USD edges lower during the Asian session on Tuesday, stalling a two-day recovery move from a two-month low, touched last week. An extended rout in the fixed income market keeps US bond yields elevated near multi-year highs. This, along with geopolitical uncertainties, helps the US Dollar retain its bullish tone despite receding October Fed hike bets. However, expectations for another RBA rate hike this month could act as a tailwind for the Aussie.

USD/JPY remains confined in a range; 158.00 holds the key

USD/JPY extends its consolidative move during the Asian session on Tuesday, trading below 158.00 amid diverging forces. Hawkish BoJ expectations support the Japanese Yen amid looming intervention risks. Meanwhile, geopolitical uncertainty and elevated US bond yields keep the US Dollar near its YTD high despite receding October Fed hike bets. This, in turn, holds back traders from placing aggressive directional bets.

$4,100: For how long can Gold defend that level?

Gold resumes the recent downtrend, approaching $4,100 early Tuesday. The US Dollar consolidates near 17-month highs amid high Treasury yields and a rebound in oil prices. From a short-term technical view, Gold’s path of least resistance appears to be down.

Ethereum: BitMine scoops extra ETH tokens following Q3 outperformance

Ethereum (ETH) treasury firm BitMine Immersion continued its buying streak of the top altcoin last week. The firm acquired 15,112 ETH, lifting its holdings to 6.016 million ETH, representing 4.9% of ETH's circulating supply and worth $16.16 billion at the time of writing. That brings the company roughly 98.5% closer to acquiring 5% of ETH's supply, a goal it tags "Alchemy of 5%."

The scarcity trade is gaining momentum – The biggest commodity moves may still be ahead

Something extraordinary is happening across global Commodity markets. Oil is above $100. Diesel has reached record prices. Copper has broken records. Global food prices are rising again. China is restricting fuel exports. Governments are releasing emergency reserves.

Eurozone inflation just hit 3.8%, its highest in three years. This chart shows why the ECB can’t simply hike its way out

The ECB would normally have a relatively straightforward answer to inflation running almost twice its target: raise interest rates. But these are not normal circumstances. This time, the bond market is already doing part of the tightening for it, leaving the ECB facing an increasingly difficult dilemma.