The G20 summit took place in Bali, Indonesia, on November 2022…
All Is Good for Canadian Dollar
Information is not investment advice
What is happening?
Just look at the charts above – the Canadian dollar has skyrocketed! Such strong growth has been caused by several reasons.
First, oil prices have gained from the global energy crunch. Crude oil has hit the highest level since 2014 as the demand is growing ahead of winter, while OPEC+ doesn’t rush to increase output significantly. Canada is one of the world’s largest oil producers and its currency has historically positively correlated with oil prices.
Second, Canadian employment figures came out better than analysts forecasted on Friday. It can signal another taper from the Bank of Canada later this month, which may push the CAD up. Just to remind you, the BOC was the first bank that tightened the policy after the Covid-19 crisis. Thus, it’s quite reasonable for the bank to continue tapering after a strong job report. Meanwhile, the US has revealed the worse-than-expected NFP numbers. Canadian Dollar strength and US Dollar weakness pressed USD/CAD to its lowest level since July.
USD/CAD has broken through all the moving averages and the support line while moving down. It has stopped ahead of the support level of 1.2445 – the July lows which the pair has failed to cross and reversed up. Let’s wait for a breakout. If it occurs, the pair is likely to drop to the psychological level of 1.2400. However, before the breakout happens, we might see a pullback to the 200-day moving average of 1.2500.
The deafening news shocked the whole world yesterday: the British Queen Elizabeth II died peacefully at the age of 96…
After months of pressure from the White House, Saudi Arabia relented and agreed with other OPEC+ members to increase production.
The first FOMC meeting comes after a buildup of anticipation from traders and investors alike, as the markets await what posture the Fed will take regarding the interest rates; would there be a hike or a cut in interest rates? Recall that the Federal Open Market Committee had previously ended the year 2022 with a 50bps hike, and an indication from Powell, the committee chairman, that the Fed could consider raising interest rates by 75bps in the course of the year 2023.
Western countries are trying to find other options for oil and gas supplies after a 10th package of sanctions, which will put more pressure on Russian oil and decrease global oil supply. Italy, for example, is in talks with Libya.
Last year was tough for the Japanese yen. USDJPY gained more than 30% over 2022, striking above 150 in October. While anticipation of slower Fed rate hikes pulled the pair below the 130 level at the start of 2023, the speculations over the destiny of BOJ’s yield control policy grabbed the attention of the Japanese assets in the middle of January. What lies ahead for traders of the Japanese yen?