Fundamental
Overview
The USD strengthened a bit
on Friday following some positive Trump’s comments on China as Treasury yields
bounced and erased the Thursday’s losses. Overall, the US dollar performance
has been mixed as markets have been driven by quick changes in risk sentiment since
Trump’s tariffs threat.
On the domestic side, the
US government shutdown continues to delay many key US economic reports. The
dollar “repricing trade” needs strong US data to keep going, especially on the
labour market side, so any hiccup on that front is weighing on the greenback.
The BLS will release the US
CPI report on Friday despite the shutdown, so that’s going to be a key risk
event. That will need to be seen in the context of US-China relations and any
negative shock by that time though. If things go south, then the CPI will not
matter much as growth fears will trump everything else.
On the CAD side, we got a
strong employment report recently which reduced the probabilities for a cut in
October to 56%. The risk-off sentiment triggered by Trump and some dovish
comments from BoC Governor Macklem last week, increased the probabilities to
86%. It looks like the BoC prefers to cut no matter what in October and bring
their policy rate to the lower bound of their estimated neutral rate, but the
Canadian CPI data today might still trigger some hawkish repricing in case it
surprises to the upside.
USDCAD
Technical Analysis – Daily Timeframe
On the daily chart, we can
see that USDCAD is consolidating above the key 1.4018 level. This is where the
buyers are stepping in with a defined risk below the level to position for a
rally into the 1.43 handle next. The sellers, on the other hand, will want to
see the price falling back below the key level to target a pullback into the
major trendline around the 1.3850 level.
USDCAD Technical
Analysis – 4 hour Timeframe
On the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. If we
get a pullback, the buyers will likely lean on the trendline with a defined
risk below it to keep pushing into new highs, while the sellers will look for a
break lower to increase the bearish bets into new lows.
USDCAD Technical
Analysis – 1 hour Timeframe
On the 1 hour chart, we can
see that we have yet another minor upward trendline. Again, the buyers will
likely lean on the trendline with a defined risk below it to keep pushing into
new highs, while the sellers will look for a break lower to target a pullback
into the next trendline. The red lines define the average daily range for today.
Upcoming Catalysts
Todaywe have the Canadian CPI
report, while on Friday we get the US CPI and the US Flash PMIs.
This article was written by Giuseppe Dellamotta at investinglive.com.
As mentioned last week, this kind of volatility spikes in gold and silver is going to be more commonplace amid the surging run that both precious metals have had and especially as they continue to hang at the highs. For gold though, there is perhaps a short-term double-top pattern that is worth taking notice as it drops by over 2% today to $4,258 currently:
The 100-hour moving average (red line) is a key near-term level to watch as sellers have failed to really secure a break of that since the beginning of the month. That rests around $4,270 currently. And even on a break of that, dip buyers still have room to lean up against the 200-hour moving average (blue line) closer to $4,163 for the time being. So, it’s not to say that a stronger correction is in motion just yet.
That being said, is silver going to lead the way in a push lower in gold this week? We’re starting to see the technical cracks in silver with it breaking below both key hourly moving averages now:
That’s the first time this month that sellers have managed that and a break under $50 does send a message in solidifying their conviction.
There’s no major headlines driving the drop here so profit-taking remains the most plausible reasoning. But if silver is bound for a steeper decline amid the technical break above, it could be one of the not-so-frequent times that it drives a similar move in gold instead of it typically being the other way around.
So, watch out for that. Gold might not be breaking down just yet but silver is already cracking under the selling pressure, and that could spell danger on sentiment in precious metals as a whole.
This article was written by Justin Low at investinglive.com.
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