US Dollar Grinds Higher as the Canadian Dollar Drops. Where to for USD/CAD?

US Dollar Grinds Higher as the Canadian Dollar Drops. Where to for USD/CAD?

US Dollar, USD/CAD, Canadian Dollar, GBP, EUR, CNY, CNH, Crude Oil, Gold – Talking Points

  • The US Dollar has been buoyed by speculation of outsized Fed hike
  • APAC equities appear vulnerable after another tumultuous session
  • The US Dollar has hit many milestones this week.Will USD/CAD keep going higher?

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The US Dollar continues to find strength ahead of next Wednesday’s Federal Open Market Committee (FOMC) meeting. It is making or nearing many historical peaks across markets.

In the US, a rail strike was averted after a deal was struck with unions. Another supply chain blockage had the potential to further undermine an economy already facing monetary policy headwinds.

Treasury yields continue to climb so far today, and the curve has further inverted. The closely watched 2s 10s at -0.44% as it approaches last month’s low of -0.51%. That is the most the curve has been inverted since the tech wreck in 2000.

The British Pound (GBP/USD) is nearing the 37-year low seen last week while the Canadian Dollar (USD/CAD) made a 2-year high in early Asian trade at 1.3252. It remains near that level at the time of going to print.

The onshore Yuan (USD/CNY) is trading above 7 today despite efforts by the People’s Bank of China (PBOC) to fix the onshore Yuan at a stronger than anticipated rate of 6.9305. The offshore rate (USD/CNH) galloped past 7 yesterday to make a high today of 7.0349.

The Euro has steadied through the Asian ahead of today’s Euro-wide final CPI number which is anticipated to be 9.1% year-on-year to the end of August.

Gold continues to languish near the 2-year low seen yesterday at US$ 1,660 an ounce.

Crude oil has struggled through the Asian session after a selloff yesterday and appears to be eyeing off last week’s low. The WTI futures contract is near US$ 85.30 bbl while the Brent contract is a touch above US$ 91 bbl.

APAC equities are again in a sea of red following on from Wall Street’s weak lead. Futures are pointing toward another tough day for European and US stocks.

ECB President Christine Lagarde will be speaking today and will be joined by a number of other ECB speakers. After UK retail sales and EU CPI data, the US will see some consumer sentiment numbers.

The full economic calendar can be viewed here.

Recommended by Daniel McCarthy

How to Trade Oil

USD/CAD TECHNICAL ANALYSIS

The 2-year high in USD/CAD today is within the 21-day simple moving average (SMA) based Bollinger Band and this may suggest that the market is comfortable with the break up.

All short, medium and long term SMAs are below the price and have a positive gradient. This may suggest that bullish momentum may evolve.

Support could be at the break points of 1.3224 and 1.3208.

Chart created in TradingView

— Written by Daniel McCarthy, Strategist for DailyFX.com

To contact Daniel, use the comments section below or @DanMcCathyFX on Twitter

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Originally Posted on: https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/euro_open/2022/09/16/US-Dollar-Grinds-Higher-as-the-Canadian-Dollar-Drops.-Where-to-for-USDCAD.html
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