Summary:
The dollar rose on Monday, up over 2% last week. Investors will examine remarks from Fed officials this week after a major rate cut.
EBC Forex Snapshot, 23 Sep 2024
The US dollar edged higher on Monday, continuing its momentum after a 2% gain last week. Investors are now closely monitoring remarks from several Federal Reserve officials scheduled for this week, following the Fed's unexpected jumbo rate cut. Market participants are eager to see whether the Fed will hint at additional measures or clarify its stance on future monetary policy.
Loonie Steadies on Positive Retail Sales Data
Canada's dollar, commonly referred to as the loonie, held steady as domestic retail sales data for July exceeded expectations. This stronger-than-expected growth reinforces the Bank of Canada’s concerns about inflation, as rising consumer demand could increase price pressures. Additionally, the BOC noted that businesses adopting AI technologies could further drive up short-term demand, potentially leading to further inflationary pressures.
USDCAD: Oil Prices Lift Amid Middle East Tensions
The US dollar to Canadian dollar (USDCAD) pair remained in focus as oil prices surged, driven by concerns over potential disruptions in regional supply due to escalating conflict in the Middle East. Additionally, last week's aggressive US rate cut is expected to support global demand, providing further support to oil prices, which are a significant driver for the Canadian economy.
| Citi (as of 16 Sep) | HSBC (as of 23 Sep) | |||
| support | resistance | support | resistance | |
| EUR/USD | 1.0857 | 1.1202 | 1.1046 | 1.1234 |
| GBP/USD | 1.2812 | 1.3266 | 1.3100 | 1.3441 |
| USD/CHF | 0.8375 | 0.8763 | 0.8400 | 0.8575 |
| AUD/USD | 0.6618 | 0.6871 | 0.6671 | 0.6890 |
| USD/CAD | 1.3441 | 1.3792 | 1.3473 | 1.3656 |
| USD/JPY | 140.25 | 147.13 | 139.91 | 147.55 |
Market Implications and Expert Insights
Given the ongoing volatility in the forex market, traders should pay close attention to both geopolitical tensions and central bank policies. The Fed's decision to cut rates could create ripple effects across major currency pairs, while oil prices may continue to influence USDCAD as tensions rise in the Middle East.
For traders, understanding these factors—along with monitoring key support and resistance levels—can help in making informed trading decisions. As always, it’s essential to rely on well-researched strategies and consider both technical and fundamental factors when trading in such a dynamic environment.
Disclaimer: This material is for general information purposes only and is not intended as (and should not be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by EBC or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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