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USD enjoyed the ‘delayed’ confidence from the market and raised against most of the related currencies. USD closed the price at 1.30401 against CAD on 9.28. Even though the rhetoric of the speech delivered by Powell volatilized the market, the remark came on Thursday hedged the uncertainty and pulled up the USD index. On the other hand, the CAD as the deadlock in the NAFTA negotiation.
The 10-year Treasury yield appeared to be flatter and close to an inverted trend after the release of the ‘dot plot’ projections issued by the Federal Open market Committee. The inverted curve, when the near-term rate is above the one in the long-term, is viewed as the signal for another round of recession. The move sparks the debate on the market whether the merging of the turning point for the booming American economy is foreseeable. Powell clarified the alternation in the forecast was to gauge if monetary policy is too tight. Lowered long-term yield is aimed to control the rate at a neutral base that neither accelerate or lag down the economic growth. The current real rate is positive for the first time in the past ten years which is unhealthy to the economic growth. Powell also stated that property price is not in the bubble and under surveillance. There are no high vulnerabilities detected in the property market. The clarification is of significance and boosts the USD index.
Good news comes from the GDP and unemployment rate as well. 4.2% equalised the expectation and relatively good in developed countries. Core Personal Consumption Expenditure outperformed the estimated number by 0.1%. The jobless claims (214K) rallied slightly compared to the estimated 210k, but the continuing jobless claims(1.661m) kept merit over the expectation ( 1.684m).
News about Canadian dollar is not positive. The involvement of Canada freezes down the talk in the North-America trinity. As said by Trump, the two countries were not getting along as a critical deadline looming. Trump is supposed to reject the meetup with Canadian PM Trudeau. Hefty car tariffs are the threat to Canada economy if Canada could not extend the NAFTA with America. The CAD will not perform with uptick move if squeezed out of the new trading accord.
Technically speaking, the pair experienced great variance in the past three days. The volatility is anticipated to be less in the following week. The pair will probably fluctuate within 50% Fibonacci retracement level and 61.8% level, 1.30530 and 1.30137 respectively. The flatter RSI reading added credence to that.&nbsp;
On the flip side, if the pair breaks the 1.30530 level, a continuous gain is foreseeable until 1.30941 at 38.2% Fibonacci retracement level.

Winning USD and losing CAD

Dec 01 2020