In this article, we have covered the highlights of global market news about the Canadian Dollar, GBP/USD, XAU/USD, XAG/USD and S&P 500.
Canadian Dollar Forecast: CAD Struggles Due to Technical Issues and Low Oil Prices
The Bank of Canada (BOC) increased interest rates by 75 basis points last week, making it the fourth significant rate increase since March. The BOC claims that in order to get inflation below its target rate, a further downturn in family demand is necessary.
The CAD did gain some strength as a result of the attempt to frontload rate increases. Since then, we have seen a general return of CAD weakness as the USD and the EUR have risen. Given the FOMC meeting the following week, there is a good chance that the Canadian Dollar will get some relief if the Fed’s view is less hawkish than anticipated. It is not advisable to be committed to any long-term bias at this time given the fluctuating emotions and in particular with the FOMC meeting coming up.
USDCAD DAILY CHART
Since its YTD low around the fifth of April, the USDCAD has been steadily moving higher from a technical standpoint (see chart). As the dollar index keeps rising, we have also exited an ascending channel that we have been trading inside since September 2021. As we finished as a bearish engulfing candle last week, before rebounding off the 50-SMA, taking out the highs this week, and continuing, this provided sellers of the pair optimism.
GBP/USD Could Fall to Multi-Decade Lows: British Pound Weekly Forecast
Looking forward to a central bank-filled fiesta, the pound had a terrible week last week. The British National Bank (BoE). has a difficult job ahead of it, but at least the central bank has had an extra week to assess the situation after the last meeting was postponed due to the untimely death of the Queen.
After analyzing the UK economic statistics from last week, I tend to support the 50 basis point interest rate rise over the 75 basis point increase that the money markets are now pricing in as being equally likely. The 50bps increase may lead to more downside given how weak the GBP is now, increasing inflationary pressures for the UK. It will also be fascinating to observe how the BoE responds to the Fed, especially if they decide to be really hawkish and front load rates by 100bps. The Fed will also be eager to continue its aggressive route towards taming inflation.
Gold and Silver Technical Outlook: Diverging Trends in XAU/USD and XAG/USD
A breach below key technical support, which spot gold is now testing, might signal additional weakening in the months ahead. It is aiming to breach the 200-week moving average and major horizontal trendline support at 1,676. Despite the fact that it closed below the support on Thursday, it could be wise to wait for two consecutive weekly closes below the support considering the importance of the support and how often it has been challenged since 2021.
A clear breach of the four-year moving average might have effects that last weeks or months rather than just a few days. Level-wise, a decline below the horizontal trendline would result in a double top pattern (2020 and 2022 highs), indicating a likely decline in price towards the 200-month moving average (now at about 1292). However, there is still considerable support around 1,620, which marks the 50% retracement of the 2018–2020 advance, and 1510, which is the 61.8% retracement.
Positive divergence on the daily and weekly charts together with the inability to maintain losses after the breach earlier this month below critical technical support point to the possibility that silver may soon settle in a range.
Silver dropped below support in the week ending September 2 at the July low of 18.11. Price did set a new bottom, but the momentum indicator known as the Relative Strength Index (RSI) did not. A recent price low accompanied by weak momentum often implies that bears are weak, increasing the possibility of a false break.
More than a Big Fed Hike Could Shake the S&P 500 and the Dollar
Over the next week, there is a significant incident risk. the type of fundamental charge that has the ability to change how trends are defined while also amplifying volatility. The anticipated of monetary policy, which will be led by the US central bank with support from several developed and developing market policy organizations, is of primary importance.
While many macro traders could be preoccupied with comparing the relative performance of one currency or region’s assets to that of another, I think a larger systemic risk factor is being examined in this situation. Following the Great Financial Crisis (GFC) in early 2009, there was a deliberate effort to limit risk, which drove market activity to ever-higher extremes. The likelihood of a complete capsize will continue to be very high as it becomes clear that the Fed and its international equivalents won’t act as a buffer against speculative losses.
Although I will be keeping a careful eye on the S&P 50 during the next week, the June bottom is still a ways off. If benchmarks are not paving the way, it will be difficult to change the overall speculative bearing.
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