2023-09-07 03:40

USD/CAD FORECAST USD/CAD rises as U.S. Treasury yields push higher following strong U.S. economic data Bank of Canada keeps interest rates unchanged, but says additional hikes should not be ruled out BoC’s hawkish hold fails to support the Canadian dollar, as the broader U.S. dollar drives FX market dynamics The Canadian dollar was a touch softer on Wednesday despite Bank of Canada’s hawkish hold, as the broader U.S. dollar retained a positive bias following remarkably strong U.S. economic numbers. In late afternoon trading in New York, USD/CAD was up about 0.17% to 1.3657, probing a key resistance zone and hovering around its best levels since late March. Better-than-expected U.S. service sector activity data boosted U.S. Treasury yields across most maturities, increasing the likelihood that the FOMC will deliver additional tightening this year and maintain a restrictive stance for an extended period to ensure a sustained convergence of inflation towards the 2.0% target. This sequence of events created a supportive environment for the greenback. With riskier currencies on offer, the Canadian dollar struggled, shrugging off BoC’s monetary policy announcement. By way of context, the institution led by Governor Tiff Macklem held interest rates steady at 5.0%, but left the door ajar to the possibility of more policy firming in light of little downward momentum in underlying inflation. While the BoC’s message indicates future rate hikes are possible, markets remained skeptical amid looming economic headwinds. The central bank acknowledged the current difficulties, noting that the economy has entered a period of weaker growth, coinciding with a decline in consumption and housing activity. Against this backdrop, traders saw little need to reprice higher the bank's terminal rate. Looking ahead, the relative strength of the U.S. economy compared to its Canadian counterpart, along with the Fed's more favorable position to implement further policy tightening, could provide USD/CAD with room for further upward movement, particularly if market volatility picks up and risk aversion takes hold. This could mean fresh multi-month highs for the pair in the near term. USD/CAD TECHNICAL ANALYSIS USD/CAD continued its upward trajectory, marking the fourth consecutive day of gains on Wednesday, but it encountered resistance in the 1.3665 region, struggling to push past it decisively. Despite this initial hesitation, the pair remains well-positioned to breach this barrier at any moment, with the 1.3700 psychological level emerging as an area of interest in the event of a bullish breakout. Moving higher, the next critical ceiling is located at 1.3850, near the 2023 peak. On the flip side, if USD/CAD gets rejected from current levels and shifts downward, the first technical support to keep an eye on rests at 1.3540, followed by 1.3500. Further down the line, the next relevant floor is situated in the vicinity of the 200-day simple moving average. USD/CAD TECHNICAL CHART USD/CAD Chart Created Using TradingView https://www.dailyfx.com/news/forex-canadian-dollar-outlook-usd-cad-on-cusp-of-breakout-despite-boc-s-hawkish-hold-20230906.html

2023-09-07 03:39

JAPANESE YEN, USD/JPY, TECHNICAL ANALYSIS, RETAIL TRADER POSITIONING – IGCS UPDATE Japanese Yen weakens to softest since November Retail traders are already strongly bearish USD/JPY The Japanese Yen closed at its weakest against the US Dollar since early November after USD/JPY soared the most since late July. In response, retail traders have increased downside exposure in the exchange rate. This can be seen by taking a look at IG Client Sentiment (IGCS), which often functions as a contrarian indicator. With that in mind, will USD/JPY extend higher next? USD/JPY Sentiment Outlook – Bullish The IGCS gauge shows that only about 20% of retail traders are net-long USD/JPY. Since an overwhelming majority of them are biased to the downside, this is offering a bearish outlook for the broader horizon. Meanwhile, downside bets have increased by 3.72% and 7.4% compared to yesterday and last week, respectively. With that in mind, overall positioning and recent changes produce a stronger bullish contrarian trading bias. Japanese Yen Daily Chart Taking a look at the daily chart below, USD/JPY has closed above 146.56, a key resistance point established throughout August. The breakout opens the door to resuming what has been the broader uptrend since the beginning of this year. Immediate resistance from here is the 61.8% Fibonacci extension level at 148.27. Pushing beyond that exposes last year’s peak of 151.94. Keep in mind that negative RSI divergence is brewing. While prices have set higher highs, the momentum indicator has not. This can at times precede a turn lower. Such an outcome places the focus on the 20-day Moving Average, which can function as support, maintaining the upside technical focus. Otherwise, further losses would place the focus on rising support from March. Chart Created in Trading View https://www.dailyfx.com/analysis/japanese-yen-outlook-remains-shakey-as-retail-traders-remain-bearish-usd-jpy-20230906.html

2023-09-07 03:38

Crude Oil, WTI, Brent, Saudi Arabia Russia, OPEC+, EIA, API, OVX – Talking Points Crude oil leapt over hurdles overnight as production cuts are pushed further out Inventory data show US demand to be strong and solid ISM number supports a robust outlook If oil prices keep going up and the US economy is strong, will another Fed hike hit WTI? The crude oil price scaled to new heights again today as traders and hedgers weigh production cuts and a continuing run down of stockpiles. Earlier this week Saudi Arabia and Russia committed to maintain their production cuts through to the end of this year. The cuts of 1 million and 300k barrels per day respectively. The squeeze on supply appears to be having the desired effect of pushing prices higher in the near term but could have unintended consequences in the long run if the price of energy ramps up significantly over an extended period. Aside from potential demand destruction, the Federal Reserve has made it clear that they are resolute in its fight on inflation. If the cost of energy leads to consistently higher prices at the pump, it might contribute to keeping rates higher for longer than would otherwise be the case. Overnight the US ISM services PMI for August printed at 54.5, notably above forecasts of 52.5 and 52.7 prior. This saw the interest rate market reassess the Fed’s hiking cycle and Treasury yields continued to climb in the aftermath. With the anaemic outlook for China’s growth and Europe facing its own headwinds, perhaps OPEC+ see slower global economic activity as a reason for the production cuts. Other data released overnight saw the American Petroleum Institute (API) report reveal another drop of -5.52 million barrels for the week ended September 1st. This was much lower than the -1.429 million anticipated and comes on top of the massive depletion of -11.486 million prior. Later today the market will be watching out for the US Energy Information Agency’s (EIA) weekly petroleum status report. The market is forecasting for a decrease of around 2 million barrels. The front-month Bloomberg Nymex WTI crack spread has collapsed over the last week, trading as low as US$ 29.11 a barrel overnight, after nudging US$ 44 in August. The crack spread is the gauge of gasoline prices relative to crude oil prices and reflects the profit margin of refiners. The latest Baker Hughes rig count revealed 1 less rig in the US over the week ended September 1st. So, while stockpiles are being drawn, it is possible that refiners are hesitant to add to production while profit margins are shrinking. In addition, backwardation between the front 2 WTI futures contracts had been moving in a bullish direction for crude and might support the case that demand in the US is robust for now. At the same time, the OVX index continues to languish at its lowest level since 2019 which may indicate that the market is not fussed about the surge in prices. The OVX index measures volatility in the WTI oil price in a similar way that the VIX index gauges volatility on the S&P 500. At the start of trading on Thursday, the WTI futures contract is a touch above US$ 87.50 bbl while the Brent contract is eyeing US$ 90 bbl at the time of going to print. Live prices can be found here. WTI CRUDE OIL, BACKWARDATION AND VOLATILITY (OVX) Chart created in TradingView https://www.dailyfx.com/news/crude-oil-price-makes-new-peak-on-supply-cuts-and-inventory-run-down-higher-wti-20230907.html

2023-09-07 03:36

AUSTRALIAN DOLLAR, AUD/USD, AUD/JPY, SYMMETRICAL TRIANGLE – TECHNICAL UPDATE: Australian Dollar remains pressured after recent losses AUD/USD closed at its lowest since early November Meanwhile, AUD/JPY is facing a Symmetrical Triangle The Australian Dollar closed at its weakest against the US Dollar since early November, opening the door to extending the broader downtrend since the beginning of this year. This is being reinforced by a Bearish Death Cross between the 20- and 50-day Moving Averages (MA) from August, with the former line recently holding as resistance. But, AUD/USD faces positive RSI divergence. This is a sign of fading downside momentum, which can at times precede a turn higher. Still, in such an outcome, the MA’s could hold as resistance, maintaining the downside technical bias. Otherwise, extending lower places the focus on the November 3rd low of 0.6272 before the 2022 bottom of 0.6170 kicks in. Chart Created in TradingView Meanwhile, against the Japanese Yen, the Australian Dollar is facing a different technical situation. A Symmetrical Triangle chart formation has been brewing since earlier this year. Now, AUD/JPY is quickly running out of space to consolidate between rising support and falling resistance. The direction of the breakout could be key for preceding the broader trend. In the event of an upside breakout, key resistance is the 23.6% Fibonacci retracement level of 94.93. Extending gains could open the door to revisiting the June high of 97.67. Otherwise, key support is the 38.2% level of 93.23. Below the latter sits the midpoint at 91.86. A stronger bearish technical conviction could see the exchange rate drop towards the 61.8% level of 90.49. Chart Created in TradingView https://www.dailyfx.com/analysis/australian-dollar-technical-update-aud-usd-faces-support-aud-jpy-a-symmetrical-triangle-20230907.html

2023-09-06 03:12

AUD/JPY: Retail trader data shows 50.63% of traders are net-long with the ratio of traders long to short at 1.03 to 1. In fact, traders have remained net-long since May 15 when AUD/JPY traded near 91.17, price has moved 3.31% higher since then. The number of traders net-long is 5.66% lower than yesterday and 4.17% higher from last week, while the number of traders net-short is 15.95% lower than yesterday and 21.05% lower from last week. Our data shows traders are now net-long AUD/JPY for the first time since May 15, 2023 when AUD/JPY traded near 91.17. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUD/JPY-bearish contrarian trading bias. https://www.dailyfx.com/analysis/AUDJPY-IG-Client-Sentiment-202309051623.html

2023-09-06 03:11

USD/JPY KEY POINTS The U.S. dollar, as measured by the DXY index, gains on soaring yields, boosting USD/JPY to its higher level since November 2022 The fundamental picture remains negative for the Japanese yen against the U.S. currency This article discusses the main technical levels of the USD/JPY pair that Forex traders should be aware of in the coming days. The U.S. dollar index soared to a six-month peak on Tuesday (104.90) on the back of a strong advance in U.S. government rates. Against this backdrop, USD/JPY (U.S. dollar - Japanese yen) staged a solid rally, rising around 0.8% to 147.65 in early afternoon trading in New York, hitting its highest level since November 2022 and coming within striking distance from clearing a key ceiling located just a touch below the 148.00 handle. The predominant driving force behind the U.S. dollar's bullish momentum since mid-July has been the surge in yields. Although the Fed’s pledge to “proceed carefully” may put a lid on this uptrend, the resilience of the U.S. economy and surging oil prices will likely ensure rates remain elevated across the curve for the foreseeable future, putting upward pressure on USD/JPY. From a technical standpoint, USD/JPY briefly dipped toward 144.55 late last week, but was ultimately repelled to the upside, with buyers reclaiming decisive control of the market following the support rejection. The pair has since gained additional ground, as shown in the chart below, where prices are seen steadily progressing toward the channel resistance at 147.75. In terms of possible scenarios, successfully piloting above the 147.75 barrier could reinforce buying impetus, setting the stage for a rally toward 149.00. On further strength, we could see a climb towards the psychological 150.00 level. In case of setback and bearish reversal, initial support appears at 146.00, followed by 144.55. Further down the line, the next area of interest is located at 143.85. USD/JPY TECHNICAL CHART USD/JPY Chart Created Using TradingView https://www.dailyfx.com/news/forex-japanese-yen-forecast-usd-jpy-blasts-off-as-broader-us-dollar-breaks-out-20230905.html