USD/CAD Daily Forecast – Test Of Support At 1.2200

USD/CAD Video 06.05.21.

U.S. Dollar Is Under Strong Pressure Against Canadian Dollar

USD/CAD is currently trying to settle below the support at 1.2200 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index is currently testing the support at the 91 level. If the U.S. Dollar Index declines below this level, it will move towards the support at 90.70 which will be bearish for USD/CAD.

Today, U.S. reported that Initial Jobless Claims decreased from 590,000 (revised from 553,000) to 498,000 while Continuing Jobless Claims increased from 3.65 million (revised from 3.66 million) to 3.69 million.

Tomorrow, foreign exchange market traders will have a chance to take a look at additional employment data from U.S. and Canada. In the U.S., Non Farm Payrolls report is expected to show that U.S. economy added 978,000 jobs in April. Unemployment Rate report is projected to indicate that Unemployment Rate declined from 6% to 5.8%.

In Canada, Employment Change report is expected to show that Canadian economy lost 175,000 jobs in April. Unemployment Rate is expected to increase from 7.5% to 7.8%.

Technical Analysis

usd cad may 6 2021

USD to CAD managed to settle below the support at 1.2250 and gained strong downside momentum. Currently, USD to CAD is testing the next support level which is located at 1.2200. RSI moved into the oversold territory, but USD to CAD may gain additional downside momentum in case the right catalysts emerge.

If USD to CAD settles below the support at 1.2200, it will move towards the next support level at 1.2170. A successful test of the support at 1.2170 will open the way to the test of the support at 1.2130.

On the upside, USD to CAD needs to stay above 1.2200 to have a chance to develop upside momentum in the near term. The next resistance level for USD to CAD is located at 1.2250.

If USD to CAD gets above this level, it will move towards the resistance at 1.2280. A move above this level will open the way to the test of the resistance at 1.2310.

For a look at all of today’s economic events, check out our economic calendar.

American Indices Moving in Opposite Directions

American Indices are currently moving in opposite directions. The tech-heavy NASDAQ index is going down, aiming for the long-term up trendline while the old-school Dow Jones flirts with all-time highs after the price escaped from the pennant formation.

The German Dax is trading inside a flag formation, which is promoting a long-term breakout to the upside.

Gold is aiming higher after a successful bounce from the 1760 USD/oz support.

The USDCAD broke the lower line of the channel down formation, which should be considered an extreme weakness.

The AUDCHF tested the lower line of the symmetric triangle pattern. A breakout to the downside is very probable.

The ZARJPY shot higher after a false bearish breakout from the Head and Shoulders formation.

The EURPLN is aiming higher after a very handsome bullish engulfing pattern on the daily chart.

The USDHUF dropped like a rock after the price created a shooting star on the daily chart, which bounced from a combination of dynamic and horizontal resistances.

For a look at all of today’s economic events, check out our economic calendar.

 

Economic Data and Monetary Policy in Focus, with the Bank of England in the Spotlight

Earlier in the Day:

It was a relatively quiet start to the day on the economic calendar this morning. The Kiwi Dollar was in action early this morning.

For the Kiwi Dollar

Building consents were in focus this morning.

In March, building consents jumped by 17.9% following a revised 19.3% slide in February.

According to NZ Stats,

  • A record 41,028 new homes had been consented in the year ended March 2021.
  • In the month of March, a monthly record 4,128 new homes were consented.

The Kiwi Dollar moved from $0.72178 to $0.72169 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.01% to $0.7217.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.11% to ¥109.33 against the U.S Dollar, while the Aussie Dollar was up by 0.01% to $0.7748.

The Day Ahead:

For the EUR

It’s a quieter day ahead on the economic data front. German factory orders and Eurozone retail sales figures will be in focus later today.

While we will expect some EUR sensitivity to the retail sales figures, German factory orders will likely be the key driver.

At the time of writing, the EUR was down by 0.02% to $1.2003.

For the Pound

It’s a relatively quiet day ahead on the economic calendar. Finalized services and composite PMI figures are due out for the UK.

Expect any revisions to the services PMI to influence ahead of the Bank of England monetary policy decision later in the day.

With the markets expecting the BoE to stand pat, any dissent in the ranks and hawkish chatter would give the Pound a boost.

At the time of writing, the Pound was flat at $1.3905.

Across the Pond

It’s a relatively quiet day ahead on the economic calendar. Unit labor costs and nonfarm productivity figures for the 1st quarter are in focus later today along with jobless claims figures.

Expect the weekly jobless claims figures to be the key driver. The markets will be looking for a fall to sub-500k levels ahead of tomorrow’s NFP numbers.

At the time of writing, the Dollar Spot Index was up by 0.01% to 91.316.

For the Loonie

It’s another quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of market risk sentiment on the day.

At the time of writing, the Loonie was down by 0.01% to C$1.2268 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR, Pound, and Dollar in the Spotlight

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning. The Kiwi Dollar and the Aussie Dollar were in action early this morning.

For the Kiwi Dollar

Employment figures were in focus this morning.

In the 1st quarter, employment increased by 0.6%, following a 0.6% rise in the 4th quarter of last year. Economists had forecast a 0.2% rise.

According to NZ Stats,

  • The unemployment rate fell from 4.9% to 4.7% in the March quarter, easing further back from a Q3 peak of 5.2%.
  • While easing back, however, the unemployment remained high compared with recent years.
  • The underutilization rate increased by 0.4 percentage points to 12.2% quarter-on-quarter. Year-on-year, the underutilization rate was up by 1.8 percentage points.
  • Quarter-on-quarter, the employment rate increased from 66.8% to 67.1%, while down by 67.7% from the March quarter of 2020.

The Kiwi Dollar moved from $0.71500 to $0.71701 upon release of the figures. At the time of writing, the Kiwi Dollar was up by 0.41% to $0.7174.

For the Aussie Dollar

Building approvals were in focus this morning.

In March, building approvals rose by 17.4% following a 21.6% jump in February. Economists had forecast a more modest 3.0% rise.

The Aussie Dollar moved from $0.77254 to $0.77304 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.38% to $0.7736.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.06% to ¥109.26 against the U.S Dollar.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic data front. Service sector PMIs for Italy and Spain are due out along with finalized PMIs for France, Germany, and the Eurozone.

Barring marked revisions to prelim figures, Italy’s services PMI and the Eurozone’s Composite PMI will likely have the greatest impact.

The devil will be in the details, with employment, new orders, and sector optimism likely to be material takeaways from the surveys.

At the time of writing, the EUR was up by 0.09% to $1.2025.

For the Pound

It’s a quiet day ahead on the economic calendar. There are no material stats for the markets to consider ahead of the Bank of England monetary policy decision tomorrow.

The lack of stats will leave the Pound in the hands of market risk sentiment on the day.

At the time of writing, the Pound was up by 0.18% to $1.3912.

Across the Pond

It’s a relatively busy day ahead on the economic calendar. The market’s favored ISM Non-Manufacturing PMI is due out along with finalized Markit services and composite PMI numbers.

Ahead of the private sector PMIs, ADP nonfarm employment change figures are also due out.

Expect the ADP nonfarm employment change and Non-Manufacturing PMIs to have the greatest impact on the day.

At the time of writing, the Dollar Spot Index was down by 0.12% to 91.177.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats due out of Canada to provide the Loonie with direction. The lack of stats will leave the Loonie in the hands of crude oil inventory numbers and market risk sentiment on the day.

At the time of writing, the Loonie was up by 0.18% to C$1.2287 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Canadian Dollar Moves Lower As Demand For Riskier Currencies Declines

USD/CAD Video 04.05.21.

U.S. Dollar Gains Ground Against Canadian Dollar

USD/CAD is trying to settle above the resistance at 1.2310 while the U.S. Dollar is moving higher against a broad basket of currencies.

The U.S. Dollar Index is currently testing the resistance at the 20 EMA at 91.35. This resistance level has already been tested several times in recent trading sessions and proved its strength. In case the U.S. Dollar Index gets above this level, it will move towards the resistance at 91.50 which will be bullish for USD/CAD.

Today, the U.S. reported that Factory Orders increased by 1.1% month-over-month in March after declining by 0.5% in February (revised from -0.8%). Analysts expected that Factory Orders would increase by 1.3%.

Meanwhile, Canada reported that Building Permits grew by 5.7% month-over-month in March compared to analyst consensus which called for growth of 2%.

The reports had limited impact on USD/CAD as foreign exchange market traders focused on general market sentiment. Safe haven assets like U.S. dollar and U.S. Treasuries were in demand today while riskier currencies found themselves under pressure.

Technical Analysis

usd cad may 4 2021

USD to CAD failed to settle below the support at 1.2280 and is trying to settle above the resistance level at 1.2310. USD to CAD has already managed to test the next resistance at 1.2350 but lost momentum and pulled back closer to 1.2310.

If USD to CAD manages to stay above 1.2310, it will have a chance to get to another test of the resistance at 1.2350. A move above this level will push USD to CAD towards the next resistance which is located at 1.2365.

In case USD to CAD gets above the resistance at 1.2365, it will head towards the resistance at 1.2385. A successful test of this level will open the way to the test of the resistance at 1.2400.

On the support side, a move below 1.2310 will push USD to CAD back towards the support at 1.2280. If USD to CAD settles below this level, it will gain additional downside momentum and head towards the next support at 1.2250.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the Loonie and the Greenback in Focus

Earlier in the Day:

It was a busier start to the day on the economic calendar this morning. The Aussie Dollar was in action early this morning.

Later this morning, the RBA is also in action. With the markets expecting the RBA to stand pat, the rate statement will be key.

For the Aussie Dollar

In March, the trade surplus narrowed from A$7.529bn to A$5.574bn. Economists had forecast a widening to A$8.000bn.

According to ABS,

  • Goods and services credits fell A$681m (-2%) to A$38,274m.
    • An A$708m fall in the export of non-monetary gold contributed to the fall in total exports.
    • Rural goods exports saw a modest A$28m fall, while the exports of general merchandise rose by A$128m.
    • Total services credits also weighed, falling by A$101m.
  • Imports rose by A$1,340m (4%) to A$32,700m.
    • General merchandise debits jumped by A$790m, with non-monetary gold imports up A$529m.
    • There were also increases in the imports of consumer goods (A$147m), capital goods (A$309m), and intermediate and other merchandise goods (A$334m).

The Aussie Dollar moved from $0.7745 to $0.77434 upon release of the figures. At the time of writing, the Aussie Dollar was down by 0.26% to $0.7743.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.17% to ¥109.25 against the U.S Dollar, with the Kiwi Dollar down by 0.21% to $0.7186.

The Day Ahead:

For the EUR

It’s a quiet day ahead on the economic data front. There are no material stats due out of the Eurozone to provide  to provide the EUR with direction.

The lack of stats will leave the EUR in the hands of market risk sentiment on the day. Following disappointing GDP numbers from last week, the EUR could come under more scrutiny with little else to consider.

At the time of writing, the EUR was down by 0.13% to $1.2048.

For the Pound

It’s a quiet day ahead on the economic calendar. April’s finalized Manufacturing PMI is due out later today.

Barring a marked revision from prelim figures, however, the numbers should have a muted impact on the Pound.

With the UK economy continuing to open up, market optimism should continue to support the Pound at current levels ahead of the BoE policy decision on Thursday.

At the time of writing, the Pound was down by 0.20% to $1.3883.

Across the Pond

It’s a quieter day ahead on the economic calendar. March trade data and factory orders are due out later today.

While trade data will be of interest, factory orders will have the greatest influence on market risk sentiment.

At the time of writing, the Dollar Spot Index was up by 0.16% to 91.091.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. Building permit figures and trade data are due out later today.

Expect the trade data to have the greatest impact on the Loonie. With the BoC’s shift in policy outlook, a marked widening in the trade surplus would deliver the Loonie with another boost.

At the time of writing, the Loonie was down by 0.12% to C$1.2294 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Test Of Support At 1.2280

USD/CAD Video 03.05.21.

Canadian Dollar Gains Ground Against U.S. Dollar

USD/CAD is currently testing the support at 1.2280 while the U.S. dollar is losing ground against a broad basket of currencies.

The U.S. Dollar Index gained downside momentum and is trying to settle below the support at the 91 level. If the U.S. Dollar Index manages to settle below this level, it will head towards the support at 90.70 which will be bearish for USD/CAD.

Today, the U.S. reported that Manufacturing PMI increased from 59.1 in March to 60.5 in April compared to analyst consensus of 60.6. Construction Spending report indicated that Construction Spending grew by 0.2% month-over-month in March after declining by 0.6% in February (revised from -0.8%). Analysts expected that Construction Spending would grow by 1.9%.

Meanwhile, Canada reported that Manufacturing PMI declined from 58.5 in March to 57.2 in April compared to analyst forecast of 56.

Foreign exchange market traders will also keep an eye on the latest developments in commodity markets which remain in a bullish mode. WTI oil is currently trying to settle above the $64 level while copper is trading close to multi-year highs which is bullish for commodity-related currencies like Canadian dollar. If commodity markets continue to move higher, USD/CAD may find itself under more pressure.

Technical Analysis

usd cad may 3 2021

USD to CAD failed to settle above the resistance at 1.2310 and is currently testing the support level at 1.2280. In case this test is successful, USD to CAD will head towards the next support at 1.2250.

A move below the support at 1.2250 will push USD to CAD towards the next support level which is located at 1.2220. In case USD to CAD declines below this level, it will move towards the next support at 1.2170.

On the upside, USD to CAD needs to settle above the resistance at 1.2310 to have a chance to develop upside momentum in the near term. If USD to CAD settles above this level, it will head towards the resistance at 1.2350. A move above the resistance at 1.2350 will push USD to CAD towards the resistance at 1.2365.

For a look at all of today’s economic events, check out our economic calendar.

Indices Start a New Month With a Drop

Gold is still holding above the 1760 USD/oz support.

The Dow Jones bounced from the upper line of the symmetric triangle pattern.

The DAX is aiming for the lower line of the rectangle formation.

The EURUSD is back inside the wedge formation, sentiment is back to negative.

The USDCAD bounced from the lower line of the wedge formation.

The EURCAD bounced after Friday’s heavy drop.

The NZDCHF broke the lower line of the rectangle pattern and then tested it as a closest resistance.

The GBPNZD broke from the sideways trend to the upside. This perfectly shows the recent negative sentiment towards the New Zealand’s currency.

The USDHUF tested the broken supports as closest resistances. When the price stays below the resistance levels, a strong sell signal will emerge.

For a look at all of today’s economic events, check out our economic calendar.

A Busy Economic Calendar Puts the EUR and the Dollar in Focus

Earlier in the Day:

It was a quieter start to the day on the economic calendar this morning. The Aussie Dollar was in action early this morning.

For the Aussie Dollar

In April, the AIG Manufacturing Index rose from 59.9 to 61.7.

According to the AIG report,

  • April’s PMI hit the highest level since Mar-2018 and the third highest under the current format of the report.
  • All six manufacturing sectors expanded, as did all seven activity indicators.
  • Australia’s capacity utilization index hit a record high, suggesting a need for increased employment and / or investment.

The Aussie Dollar moved from $0.77167 to $0.77170 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.10% to $0.7724.

Elsewhere

At the time of writing, the Japanese Yen was down by 0.21% to ¥109.54 against the U.S Dollar, with the Kiwi Dollar up by 0.18% to $0.7175.

The Day Ahead:

For the EUR

It’s a busy day ahead on the economic data front. Manufacturing PMI figures for Italy and Spain and finalized PMIs for France, Germany, and the Eurozone are due out.

German retail sales figures will also be in focus ahead of the PMI numbers.

Barring marked revision to prelim figures, Italy and the Eurozone’s manufacturing PMIs and German retail sales will be key.

At the time of writing, the EUR was up by 0.01% to $1.2021.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar.

There are no material stats to provide the Pound with direction, with the UK markets closed.

At the time of writing, the Pound was up by 0.01% to $1.3824.

Across the Pond

It’s a busy day ahead on the economic calendar. The market’s favored ISM Manufacturing PMI figures for April are due out. Finalized Markit survey manufacturing PMI figures are also due out though we would expect the ISM number to be key.

Late in the day, FED Chair Powell is also scheduled to speak. Expect any deviation from the recent guidance to influence.

At the time of writing, the Dollar Spot Index was up by 0.02% to 91.298.

For the Loonie

It’s a quiet day ahead on the economic calendar. There are no material stats to provide the Loonie with direction.

Expect Manufacturing PMI numbers and COVID-19 news updates to influence.

At the time of writing, the Loonie was up by 0.09% to C$1.2295 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

The Dollar can Build on the Pre-Weekend Gains

The Japanese yen was a notable exception. The rise in US yields helped lift the greenback nearly a percent against the yen. The Fed’s standpat stance in light of the surging economy and signals the Norwegian central bank and the Bank of Canada seemed dovish. The contrast carried the Norwegian krone and Canadian dollar to new three-year highs last week. Even if the greenback’s pre-weekend advance was exaggerated, it looks to be turning after trending lower in April.

The Federal Reserve’s broad trade-weighted nominal dollar index fell by about 7.5% in the last three quarters of 2020 after rising by 4.6% in Q1 as the pandemic struck and the dollar was bought partly as a safe haven. In addition, it was partly a function of unwinding structured positions that used the greenback as a funding currency. It gained 1.3% in Q1 21 but traded with a heavier bias in April and surrendered most of the Q1 gains, falling over 1%. Moreover, the technical indicators for the dollar have been stretched by its persistent decline in recent weeks. Frequently, it seems that the short-term trends in the dollar are reversed or consolidated around the US employment data. The April report is released on May 7, and another strong report is anticipated.

Our broad macro view is that given the large US fiscal and trade deficit (the March goods balance reported last week widened to a new record high deficit of a little more than $90 bln) requires higher yields or a weaker dollar, or some combination thereof. The fact that the US 10-year yield rose nearly 83 bp in Q1 and the dollar strengthened, and the yield fell in April, and so did the dollar is not coincidentally. We do not want to overstate the link between exchange rate and yields. The long-term relationship does not appear linear but cyclical. However, when trying to discern the recent broad trend, the foreign exchange market seems particularly sensitive to US rates.

Dollar Index

The Dollar Index fell by about 2.5% in April, essentially unwinding the March gain. The pre-weekend advance, helped apparently by month-end position adjustments, was the most since early March. Tentative support was found near 90.40. The MACD looks poised to turn higher, but the Slow Stochastic has flatlined in the overextended territory. The close above 91.15 may help stabilize the tone. To signal a correction to April, the 91.55 area may be overcome. Above there, 92.00 comes back into view.

Euro

The dovish Fed lifted the euro to $1.2150, its highest level since the end of February. Sellers greeted it and pushed it back to around $1.2015 ahead of the weekend. The move seemed exaggerated by month-end adjustments. Follow-through selling will likely test support is likely in the $1.1980-$1.2000 area. The momentum indicators are stalling. In the near term, we are more inclined to sell into strength than buy dips. Three-month euro volatility (implied) slipped below 5.5% before the weekend, its lowest level since March 2020, but closed near session highs.

Japanese Yen

The dollar bounced smartly against the yen last week. It had finished the previous week below JPY108, but the rise in US yields seemed to fuel the greenback’s recovery. After falling in nine of the past ten sessions, the dollar rose at the beginning of last week and recorded higher highs until consolidating ahead of the weekend and month-end. The MACD and Slow Stochastics have turned up, suggesting the dollar’s recovery will continue.

The dollar rose above JPY109.30 before the weekend to push and closed above the (50%) retracement of April’s decline. The next retracement target (61.8%) is near JPY109.65, and then the JPY110 level beckons. Implied vol trended lower in April alongside the dollar. The dollar’s recovery is likely to see higher implied vol, which at a little below 6%, is also near its 20-day moving average.

British Pound

A five-day advance rally was halted before the weekend as it pulled back and slipped below the 20-day moving average (~$1.3850). Once again, the market was reluctant to push it above $1.40. Sterling has not closed above that threshold since the end of February, though it has flirted with it several times. The pre-weekend drop succeeded in turning sterling lower for the week after threatening to extend its weekly advance to three. The momentum indicators stalled. Many observers see the local elections, and the election in Scotland, in particular, as a risk to sterling.

On the other hand, the Bank of England is expected to be upbeat as the fiscal stimulus and vaccine will spur a recovery sooner and stronger than previously projected. If $1.40 is the upper end of the range, then the $1.3670 area has been the lower end of the range. Initial support is seen around $1.3800. Three-month sterling vol fell below 7% last week to make a marginal new low since last March.

Canadian Dollar

The Canadian dollar was easily the strongest currency last week, gaining 1.5% against its US counterpart. It the fourth consecutive weekly advance, and it was the biggest of the year. The central bank has begun tapering, rising commodity prices is seen as constructive, and its 1.6% expansion in Q1 matches the US. However, a note of caution is generated as the US dollar closed below the lower Bollinger Band every day last week and finished the week on its lows. Another note of caution comes from the market that may be getting ahead of itself as it prices in three rate hikes by the end of 2023.

The momentum indicators are still falling, and the Slow Stochastic is stretched, and the US dollar still made new three-year lows ahead of the weekend. Initial resistance is seen near CAD1.2335 and then CAD1.2400. The low from 2018 is about CAD1.2250, and below there, chart support is sparse until the 2017 low of almost CAD1.2060. Implied volatility has begun rising. It had briefly fallen below 6% near-mid April, its lowest level since last July, but finished above 6.5%.

Australian Dollar

Rising commodity prices, including industrial metals, and a dovish Federal Reserve failed to sustain an Aussie rally above $0.7800. While it flirts and penetrates it on an intraday basis, it has failed to close above it since the end of February. Indeed, it finished the week close at its lowest level in about two and a half weeks, a tad above $0.7700, briefly dipping below it in a thin NY Friday afternoon. The momentum indicators a mixed. The Aussie spent April mostly in the $0.7600-$0.7800 range and largely above $0.7700 since mid-monthly. A break warns of a return to the lower end of the range.

The RBA meets on May 5 in Sydney. It may be a bit early for it to signal that it too wants to pull back from its extraordinary monetary support, but it seems like a good candidate for later Q3. The central bank will publish new economic projections at the end of the week, ahead of the government’s budget announcement the following week. Three-month vol is trading in its trough below 9.0%. It reached 8.75% last week, its lowest level since last March.

Mexican Peso

The peso had its worst week in a couple of months, falling in four of the five sessions. It snapped a four-week advance with a 2,1% decline, making it the second-worst performing emerging market currency after the Colombian peso (~-2.4%). Higher global interest, including a modest rise in US yields and the prospect of another 75 bp hike in Brazil in the week ahead, encouraged some profit-taking.

News of a large and unexpected trade deficit ($3 bln in March) was not helpful, but the surprising expansion in Q1 (0.4% quarter-over-quarter GDP) did not prevent the peso from extending its losses. The US dollar finished the week around MXN20.2460, its best level since April 16. The MACD and Slow Stochastic have turned up. It met the (38.2%) retracement objective of the decline since late March high near MXN20.2350. The halfway mark is about MXN20.3730.

Chinese Yuan

The broad dollar gains ahead of the weekend halted the yuan’s four-day advance. It was only the second session that the greenback gained over the redback in three weeks. Still, the dollar fell for the fourth consecutive week, which followed a six-week advance. Over the four-week streak, the yuan rose by 1.6%, making it the second strongest currency in the region after the Taiwanese dollar (~2.1%).

If the dollar strengthens in the near term, as it looks likely against a range of currencies, it can return to the CNY6.50 area. The yuan and the euro remain highly correlated. On a purely directional basis, the correlation over the past 30 and 60 days is slightly more than 0.85. The onshore market will be closed the first part of next week to celebrate the May Day holiday.

This article was written by Marc Chandler, MarctoMarket.

For a look at all of today’s economic events, check out our economic calendar.

The Week Ahead – Central Banks, Economic Data, and COVID-19 in Focus

On the Macro

It’s a quieter week ahead on the economic calendar, with 57 stats in focus in the week ending 7th May. In the week prior, 61 stats had been in focus.

For the Dollar:

In the 1st half of the week, private sector PMIs and ADP nonfarm employment change figures are in focus.

Expect the market’s favored ISM Non-Manufacturing PMI and ADP figures to be key.

The focus will then shift to the weekly jobless claim figures on Thursday ahead of the NFP numbers on Friday.

Expect nonfarm payroll figures and the unemployment rate to be the main area of focus late in the week.

On the monetary policy front, FED Chair Powell is scheduled to speak early in the week. The markets will be looking for any break from the script.

In the week, the Dollar ended the week up by 0.46% to 91.280.

For the EUR:

It’s also a busy the week on the economic data front.

Monday through Wednesday, private sector PMIs for Italy and Spain and German retail sales figures are in focus.

While retail sales are key, expect Italy and the Eurozone’s private sector PMIs to be key.

Late in the week, the German economy is back in focus.

German factory orders, industrial production, and trade data are due out. Following some disappointing GDP numbers last week, we can expect EUR sensitivity to the stats.

On the monetary policy front, ECB President Lagarde is due to speak at the end of the week…

The EUR ended the week down by 0.64% to $1.2020.

For the Pound:

It’s a relatively quiet week ahead on the economic calendar.

Finalized private sector PMIs will be in focus in a shortened week.

Expect any revisions to the services PMI to be key.

The main event of the week, however, is the BoE’s monetary policy decision on Thursday.

While the BoE is expected to stand pat, any dissent and hawkish talk give the Pound a boost.

The Pound ended the week down by 0.39% to $1.3822.

For the Loonie:

It’s a quiet week ahead on the economic calendar.

On Tuesday, trade data for March will influence ahead of April employment and Ivey PMI figures on Friday.

Expect the employment figures to be the key driver at the end of the week.

The Loonie ended the week up 1.51% to C$1.2288 against the U.S Dollar.

Out of Asia

For the Aussie Dollar:

It’s a relatively quiet week ahead.

Key stats include manufacturing data at the start of the week and trade data on Tuesday.

Building approvals are also due out on Wednesday but will likely have a muted impact on the Aussie Dollar.

While we can expect the trade data to have the greatest impact, the RBA monetary policy decision is the main event of the week on Tuesday.

Any hawkish chatter and expect the Aussie Dollar to eye a return to $0.80 levels.

The Aussie Dollar ended the week down by 0.30% to $0.7716.

For the Kiwi Dollar:

It’s a relatively quiet week ahead.

On Wednesday, employment figures for the 1st quarter are due out ahead of building consent numbers on Thursday.

Expect the employment change figures to be key in the week. The markets will be looking from a pickup in hiring to support a sustainable economic recovery.

The Kiwi Dollar ended the week down by 0.51% to $0.7162.

For the Japanese Yen:

It is a quiet week ahead, with the Japan markets closed Monday through Wednesday.

Economic data is limited to finalized private sector PMIs for April. Barring any marked revision from prelim figures, however, we don’t expect too much impact on the Yen.

The Japanese Yen rose by 0.85 to ¥107.88 against the U.S Dollar.

Out of China

It’s a busy week ahead.

Through the 1st half of the week, the market’s preferred Caixin survey PMI numbers are due out. Expect the manufacturing PMI for April to have the greatest impact on Tuesday.

At the end of the week, April trade figures will also be in focus.

A continued surge in both imports and exports would support riskier assets.

The Chinese Yuan ended the week up by 0.33% to CNY6.4749 against the U.S Dollar.

Geo-Politics

U.S and China and U.S and Russia relations remain the main areas of focus in the week ahead.

The markets will also need to monitor any chatter from Iran, however.

Corporate Earnings

While a number of the big names have released earnings results, a large number are still scheduled to release results in the week ahead.

From the U.S, big names include CVS Health Corp (Tues), ICHOR Holdings (Tues), and FOX Corp (Wed).

US Dollar Index Spikes Higher as Major Currencies Give Back Weekly Gains

The U.S. Dollar closed higher last week with all of its gains coming on Friday. The headlines said the rally was fueled by month-end profit-taking, but Treasury yields edged higher for the week and most of the U.S. economic reports beat the forecasts so there may be more to the move than end-of-the-month position-squaring.

The Fed was dovish as expected but this wasn’t news since Fed Chairman Powell and his policymaking colleagues have been telegraphing this for months. Nonetheless, the headliner writers blamed central bank policy for the weakness ahead of Friday.

Last week, the June U.S. Dollar Index settled at 91.270, up 0.431 or +0.47%.

Dollar Index Component Breakdown

Breaking down the week into the Dollar Index’s main components the Euro lost 0.63%, the British Pound fell 0.51% and the Japanese Yen closed 1.35% lower. The Canadian Dollar rose 1.46% and the Swiss Franc was up 0.07%.

The Australian and New Zealand Dollars were down 0.49% and 0.47% for the week, respectively. However, the commodity-linked currencies aren’t a component of the dollar index.

The Euro fell sharply on Friday, erasing all of its weekly gains just one day after reaching its highest level since February 26.

Reuters reported on Friday that the Euro Zone economy dipped into a second technical recession after a smaller than expected contraction in the first quarter, but is now firmly set for a recovery as pandemic curbs are lifted amid accelerating vaccination campaigns, economists said.

The British Pound also wiped out its weekly gains on Friday as investors dumped the Sterling ahead of next week’s Bank of England policy meeting. Few analysts expect major changes to the Bank of England’s policy settings next Thursday, although some see the central bank slowing its bond-buying.

The Japanese Yen was weak against the U.S. Dollar all week as rising Treasury yields helped widen the spread over Japanese Government bond yields, making the U.S. Dollar a more attractive asset.

The Canadian Dollar rose against the greenback in a move that was sparked on Wednesday as investors cheered domestic retail sales data and the Federal Reserve stuck to its dovish stance, trailing the Bank of Canada on moves to reduce emergency support for the economy.

The Fed held interest rates and its monthly bond-buying program steady, nodding to the U.S. economy’s growing strength but giving no sign it was ready to reduce its support for the recovery.

In contrast, the Bank of Canada signaled the prior week it could start hiking rates from their record lows in late 2022 and cut the pace of its bond purchases.

Essentially, Canadian Government bond yields rose faster than U.S. Government bond yields, making the Canadian Dollar a more attractive asset.

For a look at all of today’s economic events, check out our economic calendar.

Weekly Technical Market Insight: 3rd – 7th May 2021

Charts: Trading View

US Dollar Index (Daily Timeframe):

The US dollar, according to the US dollar index (DXY), marched north last week, adding 0.5 percent and snapping a three-week losing streak. The bulk of the weekly ascent emerged on Friday, inspired amidst healthy data on personal income and spending in March, in addition to a positive Chicago PMI print—the highest reading in decades.

The technical framework reveals Friday’s spirited advance—formed just north of trendline support, taken from the low 89.20—elevated the DXY to within touching distance of resistance at 91.36, a prior Quasimodo support level.

Interestingly, the 200-day simple moving average circles above the aforesaid resistance level at 91.98. Additional upside this week, therefore, could have USD bulls confront the SMA (note that moving averages frequently deliver dynamic support and resistance).

Long-term trend studies show the USD has been underwater since topping ahead of 103.00 in March 2020—many analysts likely refer to this downward movement as a primary trend on the daily scale. Also worth highlighting is the 93.43 31st March peak, and subsequent slide in April, which echoes seller strength within the downtrend.

Meanwhile, as measured by the RSI indicator, momentum recently gathered traction to the upside after discovering a bottom ahead of oversold settings. The value settled the week within close proximity of the 50.00 centreline, yet a break here may uncover resistance at 55.67.

  • Despite Friday’s bold moves, the space between the 200-day simple moving average at 91.98 and resistance from 91.36 delivers a potential ceiling to be mindful of this week, strengthened on the back of a clear-cut downtrend since early 2020.

EUR/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following a three-month retracement, demand at 1.1857-1.1352 made an entrance and inspired a bullish revival in April, up 2.4 percent at the close.

April upside throws light on the possibility of fresh 2021 peaks in the months ahead, followed by a test of ascending resistance (prior support [1.1641]).

Based on trend studies, the primary uptrend has been underway since price broke the 1.1714 high (Aug 2015) in July 2017. Additionally, price breached trendline resistance, taken from the high 1.6038, in July 2020.

Daily timeframe:

A combination of month-end flows and Friday’s healthy USD bid watched Europe’s shared currency decline 0.8 percent against the buck, and finish around session lows.

Leaving Quasimodo resistance at 1.2169 unchallenged, EUR/USD bears have the 200-day simple moving average on the radar this week (1.1935). Technical analysts will note moving averages have a tendency to deliver dynamic support and resistance when tested.

Upside momentum levelled off in the latter part of last week—topping within a whisker of RSI overbought territory—withdrawing back to the 55.00ish range. RSI support at 46.23, therefore, deserves attention this week.

Despite the 2021 retracement, trend studies reveal the currency pair has been entrenched within an uptrend since early 2020, movement that many traders will likely refer to as a primary trend on this timeframe.

H4 timeframe:

Friday’s one-sided decline landed candle action within a stone’s throw from support at 1.1990. Technical elements also bring light to a Fibonacci cluster between 1.1971 and 1.1986—a defined area on a price chart where Fib retracement levels converge.

Overthrowing the aforesaid Fib cluster this week unearths additional support at 1.1937 (aligns closely with the 200-day simple moving average on the daily scale at 1.1935), while a rotation to the upside exposes resistance at 1.2108.

H1 timeframe:

The euro found itself on the backfoot against the greenback heading into US hours on Friday, establishing a supply at 1.2091-1.2077 and dethroning demand coming in from 1.2049-1.2061.

Technically speaking, this could have EUR/USD bump heads with the key figure 1.20 early week.

While the round number is likely a watched base in this market, traders are urged to pencil in the possibility of a whipsaw through the level. Orders are likely to crowd this area, welcoming movement known as a stop run. Bids, assuming heavyweight orders, from both H1 support at 1.1989 (prior Quasimodo resistance) and H4 support between 1.1971 and 1.1990, therefore may welcome the stops (sell orders) beneath 1.20.

In terms of the RSI indicator, the value voyaged deep into oversold territory and came within striking distance of support at 13.07.

Observed levels:

Long term:

April showing some life out of monthly demand from 1.1857-1.1352 reinforces a possible retest (dip-buying scenario) of the 200-day simple moving average at 1.1935 this week.

Short term:

H4 structure reveals support resides between 1.1971 and 1.1990. A test of this area ignites a potential stop run through the 1.20 figure on the H1 timeframe—movement that could motivate a bullish presence back to at least 1.2050ish.

AUD/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Since the beginning of 2021, buyers and sellers have been battling for position south of trendline resistance (prior support – 0.4776 high) and supply from 0.8303-0.8082. Should a bearish scenario unfold, demand at 0.7029-0.6664 (prior supply) is featured to the downside.

April ended the month higher by 1.5 percent.

Trend studies (despite the trendline resistance [1.0582] breach in July 2020) show the primary downtrend (since mid-2011) remains in play until breaking 0.8135 (January high [2018]).

Daily timeframe:

Resistance at 0.7817, as you can see, welcomed sellers in the second half of last week, with Friday exacerbating losses amid healthy USD demand and declines observed in major US equity benchmarks (the Australian dollar often reacts to risk moves). Down by 0.7 percent at the close, further downside this week shines the technical spotlight on February’s low at 0.7563.

RSI movement elbowed through trendline support, extended from the low 36.55, as well as nudging marginally under the 50.00 centreline, which suggests increased downside momentum could be on the cards.

H4 timeframe:

Since mid-April, AUD/USD has been busy forging a consolidation between 0.7696-0.7715 demand and Quasimodo resistance at 0.7800.

What’s technically interesting is the unit concluded the week within the walls of the aforementioned demand, shaped by way of a hammer candle pattern (bullish signal). Should price rupture the noted base this week, trendline support, taken from the low 0.7531, and a Fibonacci cluster between 0.7657 and 0.7672, is seen lying in wait.

H1 timeframe:

Bearish forces modestly surpassed 0.77 on Friday and shook hands with a 1.272% Fib projection at 0.7697 (plotted ahead of familiar demand at 0.7679-0.7695). Leaving behind a moderate hammer candle pattern, you will note follow-through buying emerged into the close.

Beneath 0.7679-0.7695, support at 0.7668 is seen (previous Quasimodo resistance), while demand-turned supply at 0.7725-0.7737 is visible overhead, closely followed by resistance at 0.7752.

In conjunction with Friday’s 0.77 test, RSI action dipped a toe in oversold waters and challenged support at 19.40. The RSI value, albeit mildly reacting from the aforesaid support, remained within oversold terrain at the close.

Observed levels:

Long term:

Daily resistance at 0.7817 holding firm last week reflects a bearish climate and, given the room to manoeuvre lower to February’s low at 0.7563 on the daily scale, additional bearish flow may be in the offing this week.

Short term:

0.77 highlighting support Friday—along with H4 action forming a hammer candle pattern within demand at 0.7696-0.7715—could have short-term bulls climb to H1 supply at 0.7725-0.7737 early week.

Alternatively, elbowing through 0.77 and neighbouring H1 demand at 0.7679-0.7695 to test H1 support at 0.7668 (conveniently housed within the H4 Fib cluster at 0.7657-0.7672) could also attract bullish focus.

USD/JPY:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

Following January’s bullish engulfing candle and February’s outperformance, March concluded up by 3.9 percent and marginally cut through descending resistance, etched from the high 118.66.

Although April finished lower by 1.3 percent and snapped the three-month winning streak, the pair is attempting to hold the breached descending resistance, echoing potential support.

Daily timeframe:

107.58-106.85 demand—joined by a 38.2% Fib level at 107.73 and trendline support, extended from the low 102.59—sparked decisive recovery gains last week, with enough force to lift the currency pair to supply pinned at 109.97-109.18.

Further outperformance this week casts light towards longer-term supply at 110.94-110.29, stationed just under another supply at 111.73-111.19.

Trend studies show the unit has been trending higher since the beginning of 2021, therefore the recent recovery could be the beginning of a dip-buying scenario.

The RSI indicator, although ending the week above the 50.00 centreline (a sign of trend strength), is seen engaging resistance at 57.00.

H4 timeframe:

Mid-week trading witnessed support pinned at 108.50 and neighbouring demand from 108.20-108.43 (the decision point to climb 108.50) make a show, which consequently motivated a bullish wave in the second half of the week.

Having navigated through resistance at 108.99 on Friday (now labelled support), an acceleration to the upside shines light on a 61.8% Fib level at 109.60, sheltered beneath supply at 109.97-109.72.

H1 timeframe:

In line with the RSI oscillator marginally exiting overbought space, price action entered into a narrow range heading into US hours on Friday.

The technical framework shifts focus to Quasimodo resistance at 109.44, while a bearish stance draws attention to 109 and trendline support, etched from the low 107.64. Traders will also note that unseating 109.44 perhaps paves the way north to resistance at 109.95 and the 110 figure.

Observed levels:

Long term:

Monthly flow testing descending resistance-turned possible support places a question mark on daily supply at 109.97-109.18 this week. For that reason, bearish action from the aforesaid supply may be short-lived.

Short term:

H1 Quasimodo resistance at 109.44, although the base could trigger mild bearish interest, is likely to surrender, according to chart studies. Not only do we have monthly price showing signs of supportive structure, the H4 scale displays scope to advance at least to the 61.8% Fib level at 109.60 and nearby supply at 109.97-109.72.

GBP/USD:

Monthly timeframe:

(Technical change on this timeframe is often limited, though serves as guidance to potential longer-term moves)

The pendulum swung in favour of buyers following December’s 2.5 percent advance, stirring major trendline resistance (2.1161). February subsequently followed through to the upside (1.7 percent) and refreshed 2021 highs at 1.4241, levels not seen since 2018. Contained within February’s range, however, March and April witnessed decreased volatility

Despite the trendline breach (which could serve as possible support if retested), primary trend structure has faced lower since early 2008, unbroken (as of current price) until 1.4376 gives way (April high 2018).

Daily timeframe:

Resistance at 1.4003 has proved a stubborn hurdle since March, capping upside attempts on multiple occasions. Friday’s 0.9 percent decline, as you can see, throws light on 1.3670 bottoms, arranged north of Quasimodo support at 1.3609.

Should buyers regain consciousness and brush aside current resistance, Quasimodo resistance at 1.4250 could enter the frame.

From the RSI indicator, the value dropped from 58.20 peaks and crossed swords with trendline support, pencilled in from the low 36.14.

As for trend, GBP/USD has been trending higher since early 2020, despite the two-month retracement.

H4 timeframe:

Friday’s single-sided decline plummeted into 1.3809-1.3832 demand and clipped the lower side of the base. This brings notice to Quasimodo support at 1.3750, which happens to align with a 1.272% Fib projection at 1.3746 and a 78.6% Fib level at 1.3739 (Fib cluster).

H1 timeframe:

Friday ran through a number of key supports, including a trendline formation, extended from the low 1.3668, and cemented a mild bottom a few pips north of the 1.38 figure. Territory south of the aforementioned round number opens chart space to Quasimodo support at 1.3752—plotted just north of the H4 Quasimodo at 1.3750.

RSI support at 12.22, located deep within oversold space, made an appearance on Friday. It’s important to note that although the value responded from the said support, the indicator remained within oversold into the closing bell.

Observed levels:

Long term:

Despite recent hesitation within February’s range, the monthly timeframe shows a trendline resistance breach occurred late 2020. Should the 1.4376 top be engulfed, longer-term buying may become a key theme in this market.

Daily areas to watch this week are Quasimodo support at 1.3609 and resistance at 1.4003

Short term:

H4 demand at 1.3809-1.3832 taking on a mild breach Friday suggests buyers are likely to remain on the ropes in early trade this week, targeting H4 Quasimodo support at 1.3750 and associated Fib studies around 1.3744.

By the same token, therefore, H1 sellers could tunnel through 1.38 and make a run for Quasimodo support at 1.3752.

DISCLAIMER:

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The Weekly Wrap – Impressive Stats from the U.S Give the Greenback a Much-Needed Boost

The Stats

It was a busier week on the economic calendar, in the week ending 30th April.

A total of 61 stats were monitored, following 46 stats from the week prior.

Of the 61 stats, 30 came in ahead forecasts, with 23 economic indicators coming up short of forecasts. There were 8 stats that were in line with forecasts in the week.

Looking at the numbers, 38 of the stats reflected an upward trend from previous figures. Of the remaining 23 stats, 22 reflected a deterioration from previous.

For the Greenback, a run of 3 consecutive weekly losses came to an end. In the week ending 30th April, the Dollar Spot Index rose by 0.46% to 91.28. In the previous week, the Dollar had fallen by 0.76% to 90.859.

Out of the U.S

It was a busier week on the economic data front.

In the 1st half of the week, core durable goods and consumer confidence figures were in focus.

The stats were skewed to the positive. Core durable goods reversed a 0.3% fall, with a 1.6% rise in March.

More significantly, the CB Consumer Confidence Index jumped from 109.0 to 121.7.

In the 2nd half of the week, GDP, jobless claims, personal spending, and inflation figures were in focus.

The stats were also skewed to the positive, supporting market optimism towards the economic outlook.

In the 1st quarter, the economy expanded by 6.4%, following 4.3% growth in the 4th quarter of last year.

Jobless claims figures were also positive, with initial jobless claims falling from 566k to 553k in the week ending 23rd April.

At the end of the week, personal spending also impressed, jumping by 4.2% to reverse a 1% fall from February.

Inflationary pressures were on the rise, with the FED’s preferred Core PCE Price Index rising by 1.8% in March, year-on-year. In February, the index was up by 1.4%. Following the FED’s assurances from earlier in the week, however, the uptick had a muted impact on the markets.

On the monetary policy front, the FED stood pat on policy, which was in line with expectations. FED Chair Powell continued to reassure the markets that there would be no tapering to the asset purchasing program or shift in interest rates any time soon.

The assurances had left the Greenback on the backfoot in response.

In the equity markets, the Dow and the NASDAQ fell by 0.50% and by 0.39% respectively, while the S&P500 eked out a 0.02% gain.

Out of the UK

It was a particularly quiet week.

There were no material stats to provide the Pound with direction in the week.

The lack of stats left the Pound in the hands of market optimism towards the reopening of the economy.

In the week, the Pound fell by 0.39% to end the week at $1.3822. In the week prior, the Pound had risen by 0.70% to $1.3876.

The FTSE100 ended the week up by 0.45%, partially reversing a 1.15% fall from the previous week.

Out of the Eurozone

It was a busy week on the economic data front.

In the 1st half of the week, German business and consumer confidence waned as a result of the latest spike in new COVID-19 cases.

In the 2nd half of the week, stats were also skewed to the negative weighing on the EUR.

While the French economy managed to avoid a contraction in Q1, both Germany and the Eurozone’s economies contracted.

The contraction was aligned with ECB President Lagarde’s outlook and the latest downward revision to Germany’s economic forecasts.

Inflation for the Eurozone and member states, unemployment figures from Germany and the Eurozone, and French consumer spending figures also drew attention.

Consumer spending hit reverse in France while inflationary pressures picked up in France and across the Eurozone.

Unemployment from Germany disappointed, while the Eurozone’s unemployment rate declined from 8.2% to 8.1%.

For the week, the EUR slipped by 0.64% to $1.2020. In the week prior, the EUR had risen by 1.00% to $1.2097.

The CAC40 rose by 0.18%, while the DAX30 and EuroStoxx600 ended the week down by 0.94% and by 0.34% respectively.

For the Loonie

It was a busier week.

Retail sales figures impressed mid-week, with core retail sales and retail sales both jumping by 4.8% in February. In January, core retail sales had fallen by 1.2% and retail sales by 1.1%.

At the end of the week, February GDP and March RMPI numbers were also in focus.

The economy expanded by a further 0.4%, following 0.7% growth in January. In March, the RMPI rose by 2.3% following a 6.6% jump in February.

Continued market reaction to the previous week’s BoC outlook and policy decision also supported the Loonie.

In the week ending 30th April, the Loonie jumped by 1.51% to C$1.2288. In the week prior, the Loonie had risen by 0.22% to C$1.2476.

Elsewhere

It was a bearish week for the Aussie Dollar and the Kiwi Dollar, with a Friday pullback leaving the pair in the red.

In the week ending 30th April, the Aussie Dollar fell by 0.39% to $0.7716, with the Kiwi Dollar ending the week down by 0.51% to $0.7162.

For the Aussie Dollar

It was a quiet week.

1st quarter inflation and private sector credit figures for March were in focus in the week.

The stats were skewed to the negative, pegging the Aussie back in the week.

In the 1st quarter, the trimmed mean CPI rose by 1.1% year-on-year, its lowest annual movement on record.

Private sector credit figures were positive, however, with both personal and business credit on the rise.

For the Kiwi Dollar

It was also a quiet week.

Trade data and business confidence figures were in focus.

A narrowing of New Zealand’s trade surplus was Kiwi Dollar negative, while a pickup in business confidence provided support late in the week.

The narrowing of New Zealand’s trade surplus came as imports surged at the end of the 1st quarter. Year-on-year, New Zealand’s trade surplus narrowed from NZ$2,380m to NZ$1,690m.

In April, the ANZ Business Confidence Index rose by 6 points from a prelim -8.4 to -2.0.

For the Japanese Yen

It was a busy week.

Mid-week, retail sales figures impressed. In March, retail sales were up by 5.2%, year-on-year. In February, sales had been down by 1.5%.

At the end of the week, industrial production increased by 2.2%, reversing a 1.3% decline from February.

Deflationary pressures picked up in April, however, with Tokyo core consumer prices falling by 0.2%, year-on-year. In March, core consumer prices had fallen by 0.1%.

The Japanese Yen fell by 1.33% to ¥109.31 against the U.S Dollar. In the week prior, the Yen had risen by 0.85% to ¥107.88.

Out of China

It was a quiet week on the data front.

NBS private sector PMIs were in focus at the end of the week. The stats were skewed to the negative, however, with both service and manufacturing sector growth easing in April.

The Manufacturing PMI fell from 51.9 to 51.1, with the Non-Manufacturing PMI falling from 56.3 to 54.9.

In the week ending 30th April, the Chinese Yuan rose by 0.33% to CNY6.4749. In the week prior, the Yuan had risen by 0.37% to CNY6.4963.

The CSI300 slipped by 0.23%, with the Hang Seng ended the week down by 1.22%.

USD/CAD Daily Forecast – U.S. Dollar Attempts To Rebound Against Canadian Dollar

USD/CAD Video 30.04.21.

Resistance At 1.2310 Stays Strong

USD/CAD has recently made an attempt to settle above the resistance at 1.2310 but failed to develop sufficient upside momentum and pulled back while the U.S. dollar gained ground against a broad basket of currencies.

The U.S. Dollar Index managed to settle above the resistance at 91 and made an attempt to settle above the next resistance at 91.30. In case the U.S. Dollar Index settles above this level, it will move towards the 50 EMA at 91.50 which will be bullish for USD/CAD.

Today, the U.S. reported that Personal Income increased by 21.1% month-over-month in March compared to analyst consensus of 20.3%. The huge stimulus package boosted Personal Income and also provided support to Personal Spending which increased by 4.2% compared to analyst consensus which called for growth of 4.1%.

U.S. Consumer Confidence report showed that Consumer Confidence increased from 84.9 in March to 88.3 in April compared to analyst consensus of 87.4.

Foreign exchange market traders also had a chance to take a look at GDP data from Canada which indicated that GDP increased by 0.4% month-over-month in February compared to analyst consensus which called for growth of 0.5%.

Technical Analysis

usd cad april 30 2021

USD to CAD has recently tested the resistance at 1.2310 but did not manage to develop sufficient upside momentum. In case USD to CAD manages to settle above this level, it will move towards the next resistance which is located at 1.2350.

A successful test of the resistance at 1.2350 will open the way to the test of the next resistance at 1.2365. If USD to CAD gets above this level, it will head towards the next resistance at 1.2385.

On the support side, USD to CAD needs to settle below the support level at 1.2280 to continue its downside move. This support level has already been tested several times and proved its strength.

In case USD to CAD declines below the support at 1.2280, it will head towards the next support at 1.2250. A successful test of the support at 1.2250 will push USD to CAD towards the next support at 1.2220.

For a look at all of today’s economic events, check out our economic calendar.

Terrible Month for USD but Maybe the Last Day Will Be Better

Gold attacked a crucial support again but this time with a very sharp fall.

Brent oil initiated a bearish correction.

The Dow Jones is still in a pennant waiting for a breakout.

The DAX is still in a rectangle pattern also patiently waiting for a direction.

The EURUSD has started a bearish correction.

The Canadian Dollar is still going stronger.

The EURAUD is in a symmetric triangle waiting for a breakout.

The AUDCHF is in a similar situation.

The EURNZD is also waiting to end the sideways trend but in this case, the price is locked inside of a rectangle.

The AUDJPY defends a crucial support level after the bullish breakout from the triangle. It’s an interesting opportunity in terms of risk to reward ratio.

The ZARJPY defends the neckline of the head and shoulders formation.

The USDHUF is in a long-term sell signal after the price drops below the major support.

For a look at all of today’s economic events, check out our economic calendar.

A Busy Economic Calendar Puts the EUR, the Loonie, and the Greenback in Focus

Earlier in the Day:

It was a busy start to the day on the economic calendar this morning. The Japanese Yen and the Aussie Dollar were in action, with economic data from China also in focus early this morning.

For the Japanese Yen

Inflation and industrial production figures were in focus this morning.

In April, Tokyo core consumer prices fell by 0.2%, year-on-year, following a 0.1% decline in March. Economists had forecast a 0.2% decline.

According to the Ministry of Internal Affairs and Communication,

  • Prices for transportation & communication were down 3.9%, with prices for fuel, light, & water charges sliding by 5.5%.
  • There was also a fall in prices for medical care (-0.2%).
  • Prices for furniture & household utensils rose by 4.4%, with prices for culture & recreation increasing by 1.1%.
  • There were also prices increases for clothes & footwear (+0.7%), housing (+0.5%), and education (+0.5%).

Industrial production rose by 2.2% in March, according to prelim figures, reversing a 1.3% decline in February. Economists had forecast a 2.0% decline.

The Japanese Yen moved from ¥108.883 to ¥108.911 upon release of the figures. At the time of writing, the Japanese Yen was up by 0.09% to ¥108.83 against the U.S Dollar.

From China

Private sector PMI figures for April drew attention this morning.

In April, the NBS Manufacturing PMI fell from 51.9 to 51.1, with the services PMI declining from 56.3 to 54.9. As a result, the NBS Composite PMI eased back from 55.3 to 53.8.

The Aussie Dollar moved from $0.77784 to $0.77758 upon release of the figures that preceded economic data from Australia.

For the Aussie Dollar

Wholesale inflation figures were in focus this morning along with private sector credit numbers.

According to the ABS, the producer price index increased by 0.4% quarter-on-quarter, following a 0.5% rise in the 4th quarter.

  • There were price increases for Petroleum refining and petroleum fuel manufacturing (+20.6%), building construction (+0.5%), and accommodation (+5.8%).
  • Price for electronic equipment manufacturing fell by 5.3%, with prices falling for other transport equipment manufacturing (-3.1%) and furniture & other manufacturing (-1.7%).

Year-on-year, the producer price index increased by 0.2% in the 1st quarter. In the 4th quarter, the PPI had fallen by 0.1%.

Private sector credit rose by 0.4% in the month of March, following a 0.2% increase in February.

According to the RBA,

  • Total credit for housing rose by 0.5%, following a 0.4% increase in February.
  • More significantly, however, both business and personal credit were on the rise.
  • Personal credit increased by 0.2% after having fallen by 0.5% in February.
  • Business credit rose by 0.3% after having stalled in February.

The Aussie Dollar moved from $0.77754 to $0.77799 upon release of the figures. At the time of writing, the Aussie Dollar was up by 0.14% to $0.7777.

Elsewhere

At the time of writing, the Kiwi Dollar up by 0.07% to $0.7249.

The Day Ahead

For the EUR

It’s a busier day ahead on the economic data front. 1st quarter GDP numbers for France, Germany, and the Eurozone will be in focus later this morning. Inflation figures for France, Italy, and the Eurozone are also due out.

For the Eurozone, unemployment will also draw interest following disappointing unemployment numbers from Germany on Thursday.

Expect Germany and the Eurozone’s GDP numbers to have the greatest impact on the EUR, however.

At the time of writing, the EUR was up by 0.01% to $1.2122.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar.

There are no material stats to provide the Pound with direction. A lack of stats will leave the Pound in the hands of market risk sentiment and COVID-19 news updates on the day.

At the time of writing, the Pound was up by 0.09% to $1.3957.

Across the Pond

It’s a busy day ahead on the economic calendar. Inflation and personal spending figures are the key stats of the day.

With the FED reinforcing its stance on monetary policy, however, any pickup in inflationary pressures should have a muted impact on the Dollar.

Other stats on the day include Chicago PMI and finalized Michigan consumer expectation and sentiment figures.

We would expect these numbers to have a muted impact on the Dollar and the broader market, however.

At the time of writing, the Dollar Spot Index was up by 0.01% to 90.621.

For the Loonie

It’s a relatively busy day ahead on the economic calendar. GDP figures for February and RMPI numbers for March are due out.

While the numbers will influence, any downside from disappointing numbers will likely be limited.

At the time of writing, the Loonie was up by 0.07% to C$1.2275 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.

USD/CAD Daily Forecast – Test Of Support At 1.2310

USD/CAD Video 29.04.21.

U.S. Dollar Remains Under Pressure Against Canadian Dollar After Yesterday’s Sell-Off

USD/CAD is currently trying to settle below the support at 1.2310 while the U.S. dollar is gaining ground against a broad basket of currencies.

The U.S. Dollar Index failed to settle below the support at 90.50 and rebounded towards the resistance at 90.70. Currently, the U.S. Dollar Index is trying to settle above this level. In case this attempt is successful, the U.S. Dollar Index will move towards the next resistance at the 91 level which will be bullish for USD/CAD.

Today, the U.S. reported that Initial Jobless Claims declined from 566,000 (revised from 547,000) to 553,000 compared to analyst consensus of 549,000. Continuing Jobless Claims increased from 3.65 million (revised from 3.67 million) to 3.66 million compared to analyst consensus of 3.61 million. The reports supported Fed’s view that job market remained far from full recovery.

Foreign exchange market traders also had a chance to take a look at GDP Growth Rate report which showed that GDP grew by 6.4% quarter-over-quarter in the first quarter compared to analyst consensus of 6.1%.

The U.S. economy rebounds at a robust pace, and some traders and analysts are already worried that the fast pace of this rebound will lead to high inflation. The Fed does not look worried about inflation, but Treasury yields have been moving higher in recent trading sessions, which can provide more support to the American currency.

Technical Analysis

usd cad april 29 2021

USD to CAD remains under pressure and is trying to settle below the support at 1.2310. In case this attempt is successful, it will move towards the next support level at 1.2280.

A successful test of the support at 1.2280 will open the way to the test of the next support at 1.2250. If USD to CAD declines below 1.2250, it will move towards the support level which is located at 1.2220.

On the upside, a move above 1.2310 will open the way to the test of the resistance at 1.2350. If USD to CAD manages to settle above this level, it will head towards the next resistance at 1.2365. A move above this level will push USD to CAD towards the resistance at 1.2385.

For a look at all of today’s economic events, check out our economic calendar.

Gold With a Bounce From a Crucial Support

Gold is bouncing from a crucial support with a hammer formation on the daily chart.

Silver is still in a a mid-term channel up formation.

The SP500 is at the all-time highs.

The Dow Jones and Dax are still inside a pennant, in both cases we’re waiting for a breakout.

The EURUSD is still moving upwards.

The USDCAD is moving lower after a false breakout from the down trend. The Bank of Canada (BoC) is helping the situation.

The EURCAD is also moving lower but the drop is slowed down by a stronger EUR.

The NZDCHF is inside a rectangle pattern, waiting for a decisive breakout.

For a look at all of today’s economic events, check out our economic calendar.

Economic Data Puts the EUR and the Greenback in Focus Following President Biden’s Address

Earlier in the Day:

It was a relatively busy start to the day on the economic calendar this morning.

The Kiwi Dollar was in focus in the early hours. More significantly, however, U.S President Biden addressed Congress this morning, supporting riskier assets.

For the Kiwi Dollar

Trade data and business confidence were in focus early this morning.

In March, the trade surplus narrowed from NZ$201m to NZ$33m month-on-month.

Year-on-year, the trade surplus narrowed from NZ$2,380m to NZ$1,690m.

According to NZStats,

  • Imports were the highest ever for March, rising by NZ$559m to NZ$5.6bn. The rise came in spite of a NZ$399m slide in crude oil imports.
  • Imports of vehicles, parts, and accessories rose by NZ$190m, mechanical machinery and equipment by NZ$127m, textiles and textile articles by NZ$125m, and electrical machinery and equipment by NZ$115m.
  • By contrast, exports fell by NZ$134m to NZ$5.7bn from the same period last year.

The Kiwi Dollar moved from $0.72580 to $0.72583 upon release of the figures that preceded President Biden’s speech and business confidence figures.

In April, the ANZ Business Confidence Index rose by 2 points to -2.

According to the finalized April survey,

  • Business confidence jumped by 6 points from a prelim -8.4 to a net -2.0%.
  • Firms’ own activity outlook rose by 5 points to 22.2% (prelim: 16.4%).
  • Investment intentions rose 5 points to 17.1% (prelim: 12.4%).
  • Employment intentions increased by 2 points to 16.4% (prelim: 14.1%).
  • Cost expectations rose by 3points to a net 76.1% of respondents expecting higher prices (prelim: 75.1%).
  • A net 55.8% of respondents intend to raise prices (prelim: 52.9%).
  • Export intentions rose 4 points to 9.1% (prelim: 6.6%).
  • A net 41.7% of firms expect credit to be harder to get (prelim -45.5%).
  • Firms were evenly split on whether profits will rise or fall at 0.3% (prelim: -4.3%).

The Kiwi Dollar moved from $0.72711 to $0.72734 upon release of the figures. At the time of writing, the Kiwi Dollar up by 0.36% to $0.7281.

Elsewhere

At the time of writing, the Japanese Yen was up by 0.14% to ¥108.45 against the U.S Dollar, with the Aussie Dollar up by 0.11% to $0.7811.

The Day Ahead:

For the EUR

It’s a busier day ahead on the economic data front. German unemployment and prelim inflation figures are in focus later today.

While we expect the unemployment figures to be key, prelim consumer prices will also influence later in the day.

From Spain, prelim consumer prices for April are also due out, though we expect the numbers to have a muted impact on the EUR.

At the time of writing, the EUR was down by 0.18% to $1.2148.

For the Pound

It’s yet another particularly quiet day ahead on the economic calendar.

There are no material stats to provide the Pound with direction. A lack of stats will leave the Pound in the hands of market risk sentiment and COVID-19 news updates on the day.

At the time of writing, the Pound was up by 0.29% to $1.3976.

Across the Pond

It’s another relatively busy day ahead on the economic calendar. 1st quarter GDP and weekly jobless claims figures will draw interest later today.

While the GDP numbers will certainly influence, initial jobless claims will need to continue the recent downward trend.

Pending home sales figures for March are also due out but will likely have a muted impact on the Dollar and the broader markets.

At the time of writing, the Dollar Spot Index was down by 0.15% to 90.447.

For the Loonie

It’s particularly quiet day ahead on the economic calendar. There are no material stats due out to provide the Loonie with direction.

The lack of stats will leave the Loonie in the hands of stats from the U.S and market risk sentiment in general.

At the time of writing, the Loonie was up by 0.19% to C$1.2291 against the U.S Dollar.

For a look at all of today’s economic events, check out our economic calendar.