Canadian Dollar, USD/CAD, US Dollar, BoC, Fed, FOMC, AUD, Lithium – Talking Points

  • The Canadian Dollar seems weak after a benign CPI
  • US Dollar power may be seen throughout a quantity of markets, boosted by yields
  • All eyes on the FOMC price hike immediately. Will it elevate USD/CAD additional?

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The Canadian Dollar continues to stay below stress forward of immediately’s Fed assembly. USD/CAD is holding the features seen in response to a miss on Canadian CPI yesterday.

The year-on-year determine of 7.0% and the month-on-month print of -0.3% have been under expectations by 0.3% and 0.2% respectively. USD/CAD made a 2-year excessive at 1.3377 in Asian commerce immediately.

The subsequent Bank of Canada financial coverage choice isn’t due till twenty sixth October and there can be one other set of CPI knowledge on the nineteenth of October.

Currency markets have been subdued up to now, with the exception of a weaker Australian Dollar. Iron ore and different base metals declined immediately, dragging the commodity-exporting foreign money down.

In the uncommon earth house, lithium costs have gone ballistic after a file worth acquired by Pilbara Mineral Limited this week in an public sale for a cargo from Pilbara, the mineral-rich area of north-western Australia.

The worth of $7,708 a ton for spodumene focus delivered to China is the best on file. Spodumene is a partly processed kind of lithium.

The Bank of Japan did an unscheduled intervention of bond shopping for immediately, sustaining the cap on 10-year Japanese Government Bond (JGB) at 0.25%. USD/JPY is edging up towards 144.

The 10-year Treasury bond yield is at an 11-year excessive above 3.55% whereas the 2-year yield is at a 15-year peak above 3.95%.

The inversion of 40 foundation factors is nearing the 20-year file of -0.51% seen in August. The US Dollar (DXY) index is urgent towards the 20-year excessive seen earlier this month.

APAC fairness markets seem a tad rudderless, having been pulled decrease after a damaging day on Wall Street.

Gold is languishing at 2-year lows close to US$ 1,660 whereas crude oil is regular with the WTI futures contract round US$ 84 bbl, whereas the Brent contract is a contact above US$ 90.70 bbl.

The US will see some knowledge on residence gross sales and mortgage functions, however the Federal Open Market Committee (FOMC) assembly will maintain centre stage.

The market is usually anticipating a 75 foundation level carry, however the language from Fed Chair Jerome Powell after the choice is introduced would be the key for markets going ahead.

The full financial calendar may be seen right here.

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The 2-year excessive in USD/CAD noticed the value outdoors the higher band of the 21-day easy shifting common (SMA) primarily based Bollinger Band. A detailed again contained in the band could sign a possible pause or reversal within the bullish run.

Resistance may very well be on the October 2020 peak of 1.3390. On the draw back, close by assist is perhaps on the break factors of 1.3224 and 1.3208.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for

To contact Daniel, use the feedback part under or @DanMcCathyFX on Twitter

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