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Saturday, 28 January 2023
USD/CAD and Gold are two trades to keep an eye on.

USD/CAD and Gold are two trades to keep an eye on.

2022-10-31

The USDCAD is battling a hawkish Fed and rising oil costs.

The loonies tracked higher oil prices yesterday, causing the USDCAD to fall 0.1 percent. WTI rose more than 7% on worries that the EU might follow the Fed’s lead and impose a ban on Russian oil imports. After Fed Powell reinforced the FOMC’s hawkish message last week, the Lonnie’s strength eclipsed a generally higher USD. The strength of the dollar today is overshadowing fresh increases in oil, which is up 2% today. In addition to API crude oil stockpile data, Canadian product prices, which are considered a pointer to inflation, are due.

Where next for USDCAD?

USDCAD broke free from the trading range it had been in since late January, sliding below 1.2650, the trading range’s bottom band, to a 2-month low of 1.2565. At this level, the Doji candle indicates hesitation, and the price is currently trading inside yesterday’s range. The MACD indicates that there will be more decline in the future. Sellers will be looking for a move below 1.2560, the low set on January 26, to open the door to the 1.25 round figure. In order to expose the 50 and 100 sma at 1.2690, any recovery would have to reclaim 1.2650.

Gold may be under pressure as Fed Chairman Powell discusses rate hikes.

Despite Fed Chairman Powell’s aggressive remarks, gold prices increased Wednesday. The chief of the US central bank stated that the Fed was ready to take whatever actions were required to reduce inflation and that rates may be raised by more than 25 basis points at any meeting. Gold has managed to grab a bid, owing to rising oil costs, which have raised inflation predictions. Gold is currently sliding down, with the Fed’s aggressive stance expected to limit gains in non-yielding gold. Gold will suffer if the Fed becomes more hawkish. Demand for the yellow metal is being dragged down by cautious optimism surrounding Ukraine after Zelenskyy again expressed a willingness not to pursue NATO membership, as well as news that Russia averted default. The economic calendar is light, but Fed speakers are expected to boost gold prices.

Where next for Gold prices?

Gold has climbed from its bottom of 1895 last week and is currently trading in a holding pattern limited on the upside by 1955, the March 15 high, and on the downside by 1915, a level that has served as support or resistance on multiple occasions in recent weeks. Further decline is supported by the MACD. Sellers will be looking for a move below 1915 in order to test the round number of 1900 and expose the 50 sma at 1880. Resistance is observed in 1955, just ahead of the February 24 peak of 1972.

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