#USDCAD @ 1.37253 US Initial Jobless Claims flashed the tight labor market, while Existing Home Sales continued to fall, feeling the shocks of the Fed’s policy. (Pivot Orderbook analysis)

…
This is a premium post.
[s2If !current_user_can(access_s2member_level4)]Please register for PREMIUM VERSION HERE to read full post below containing analysis. In case of any error or you think you are not able to read the full post below, please email us at support#nehcap.com [lwa][/s2If] [s2If current_user_can(access_s2member_level4)]

• US Initial Jobless Claims flashed the tight labor market, while Existing Home Sales continued to fall, feeling the shocks of the Fed’s policy.
• Higher-than-expected inflation in Canada keeps investors reassessing another large-size rate hike by the Bank of Canada.
• USD/CAD tumbled below 1.3700 after hitting a daily high of 1.3806.

The pair currently trades last at 1.37253.

The previous day high was 1.381 while the previous day low was 1.3718. The daily 38.2% Fib levels comes at 1.3775, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3753, expected to provide resistance.

The USD/CAD plunged from around 1.3800 as the US Dollar losses against most G8 currencies, despite high US Treasury yields and expectations of the Fed hiking rates by a larger size at November’s meeting. Also, a risk-on mood spurred by China’s cutting quarantine for arrivals was cheered by investors as US equities are trading with gains. At the time of writing, the USD/CAD is trading at 1.3695.

In the Asian session, wires reported that China could ease quarantines for arrivals from 10 to 7 days. That said, risk-perceived assets edged higher on the headline, as shown by global equities advancing. Aside from this, US economic data revealed before Wall Street opened reported that US Initial Jobless Claims for the last week dropped unexpectedly to 214K, less than the 231.5K estimated. Given the Federal Reserve hikes more than 300 bps to the Federal funds rate to the 3.25% area, the labor market is still showing resilience, as shown by the report. It should be noted that September’s Unemployment Rate ticked lower, meaning the Fed job is not done.

Of late, US Existing Home Sales fell 1.5%, less than the 2.4% contraction estimated, though it has been the eighth month in a row, as elevated mortgage rates and higher prices keep prospective buyers at bay.

On the Canadian front, Wednesday’s September inflation report surprised the upside, jumping 6.9% YoY, above estimates of 6.7%, so market participants ratchet up expectations for the Bank of Canada’s additional rate hikes, with a 75 bps lift for the next meeting fully priced in. Following the report, the USD/CAD trimmed some of its gains. However, throughout Thursday’s session, positioning ahead of the BoC’s meeting in the next week underpinned the Loonie, with the USD/CAD tumbling more to the 20-DMA.

Analysts at TD Securities changed their view and expected the BoC to lift rates by 75 bps. They noted, “The Bank has grown increasingly concerned with the inflation backdrop and potential for long-term inflation expectations to become unanchored, and this data does not provide any evidence that inflation has turned. This should tip the scales to a 75bp move next week.”

Technical Levels: Supports and Resistances

USDCAD currently trading at 1.3695 at the time of writing. Pair opened at 1.3766 and is trading with a change of -0.58 % .

The pair is trading below its 20 Daily moving average @ 1.3708, above its 50 Daily moving average @ 1.3324 , above its 100 Daily moving average @ 1.31 and above its 200 Daily moving average @ 1.2899

The previous day high was 1.381 while the previous day low was 1.3718. The daily 38.2% Fib levels comes at 1.3775, expected to provide resistance. Similarly, the daily 61.8% fib level is at 1.3753, expected to provide resistance.

Note the levels of interest below:

• Pivot support is noted at 1.372, 1.3673, 1.3628
• Pivot resistance is noted at 1.3811, 1.3856, 1.3902

[/s2If]
Join Our Telegram Group