Sat, Oct 23, 2021 @ 17:25 GMT
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USD Remains Rather Stable In A Rather Slow Market

The greenback remained relatively stable yesterday against a number of its counterparts, as the market’s attention shifts to the FOMC’s interest rate decision next week which could provide further clues regarding the bank’s intentions on tapering its stimulus. US stockmarkets on the other hand, gained a bit as investors seem to overcome somewhat their worries about the prospects of the US economy’s recovery, yet the movement was still unconvincing. Gold edged a bit lower, yet overall, the precious metal seems to maintain a sideways movement also driven by USD’s inactivity and given that US yields remained little changed over the day. Today we may see traders keeping an eye out for the US financial releases as at the same time we get the weekly initial jobless claims figure, the Philly Fed Business index for September and the US retail sales for August, covering the fields of employment, consumption, and manufacturing. The readings are forecasted to be lukewarm which may weaken the USD somewhat should the forecasts be met.

The USD index maintained a sideways movement between the 92.75 (R1) resistance line and the 92.30 (S1) support level. We tend to maintain our bias for a sideways movement, given that the RSI indicator below our 4-hour chart runs along the reading of 50, implying a rather indecisive market. Should the market display a selling interest for the index, we may see it breaking the 92.30 (S1) support line which served the pair well as a support line on the 10th and 14th of September and aim for the 91.75 (S2) support level. On the other hand, should the USD be in high demand, we may see the index breaking the 92.75 (R1) resistance line which held its ground on the 8th of September and aim for the 93.20 (R2) resistance level.

CAD gains on accelerating CPI

The Loonie gained against the USD yesterday given that Canadian Core CPI rates accelerated for the month of August and the core CPI rate reached levels not seen in thirty years on a year-on-year level. The acceleration of the CPI rates may boost BoC’s hawkishness and thus the bank may proceed with further tapering of its QE program. On CAD’s fundamentals the uncertainty regarding the Canadian election result on the 20th of September seems to be ongoing and may undermine the Loonie if continued and intensified. On the flip side oil prices rose yesterday providing additional support for the CAD, as a wider than expected drawdown was reported in the US crude oil inventories, while storm Nicholas seems to have receded. Today we expect CAD traders to keep a close eye over the Canadian financial releases yet oil prices along with fundamentals could also play a key role in CAD’s direction.

USD/CAD dropped yesterday as the Loonie tended to gain and broke the 1.2650 (R1) support line, now turned to resistance. We tend to keep a bias for a sideways motion, given that the pair seems to have a playful mood around the 1.2650 (R1) level and the RSI indicator below our 4-hour chart is just below the reading of 50. Should the bulls take the lead, we may see the pair breaking the 1.2650 (R1) resistance line and aim if not reach the 1.2785 (R2) resistance level, which capped the pair’s upward movement on the 20th of July. Should the bears be in charge, we may see the pair breaking the 1.2495 (S1) support line on the 5th and 11th of August, as well as the 3rd of September, aiming for lower grounds.

Other economic highlights today and the following Asian session:

During today’s late European session, we note the planned speech of ECB President Lagarde and a bit later we get from Canada the number of House starts for August and the wholesale trade for July, while from the US we get the weekly initial jobless claims, the Philly Fed Business index for September and the Retail sales growth rate for August. During Friday’s Asian session we get New Zealand’s Manufacturing PMI for August.

USD Index H4 Chart

Support: 92.30 (S1), 91.75 (S2), 91.30 (S3)

Resistance: 92.75 (R1), 93.20 (R2), 93.70 (R3)

USD/CAD H4 Chart

Support: 1.2495 (S1), 1.2375 (S2), 1.2270 (S3)

Resistance: 1.2650 (R1), 1.2785 (R2), 1.2920 (R3)

 

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