The USD/CAD is trading again near values it traversed two weeks; this as behavioral sentiment now awaits major U.S data this Thursday and Friday.(Click on image to enlarge) The USD/CAD is near the 1.36775 mark as of this writing, this after the currency pair has managed to sustain lower increments attained in early trading this morning. The USD/CAD is also intriguingly near price ratios it traded on April the 10th. The USD/CAD had been trading near the 1.35600 vicinity two weeks ago when stronger than anticipated U.S inflation data was published. In the ensuing two weeks the USD/CAD has seen highs get tested. The currency pair climbed to nearly 1.38470 when Jerome Powell essentially said last week that  from the U.S Federal Reserve would remain in place because of stubborn inflation. The shift in sentiment had been anticipated, so while the USD did show a solid amount of strength in Forex, the USD/CAD actually started to move off the highs and begin to selloff over the past handful of days. No Time for Bearish Celebrations in the USD/CADHowever before  start to get overly ambitious about what will happen in the near-term, they should note that technically the currency pair is at an important price level that occurred two weeks ago after key U.S  came in stronger than expected. The reason why this is important to consider is because tomorrow the U.S will present Gross Domestic Product reports and part of these statistics will be the GDP Price Index.Sentiment within financial institutions remains cautious, the […]

The Australian dollar is rising, propelled by unexpectedly high inflation figures, painting a bullish picture for the AUD/USD forecast. After this report, investors have lowered their expectations for a Reserve Bank of Australia rate cut. On the other hand, the dollar was weak after PMI data revealed a slowdown in the economy. Investors abandoned hopes for an RBA cut this year after Australia’s Consumer Price Index beat forecasts. In Q1, the CPI increased by 1%, beating estimates for an increase of 0.8%. Notably, the increase came from stubborn service cost pressures. After the report, there was a sharp decline in RBA rate cut expectations, with some even pricing a 4% chance of a hike in August.The RBA has remained mostly cautious about cutting rates due to the still-tight labor market. However, there was some hope that the central bank would start sometime this year. This latest report has changed that outlook, as the RBA might not cut rates in 2024. As a result, the Aussie has a slight edge over other major currencies, given the RBA might cut rates after the Fed. Meanwhile, the AUD/USD pair got additional support from a weaker US dollar. On Tuesday, PMI data showed a decline in US business activity in April, which relieved the Fed. Any sign of weaker economic demand gives policymakers more confidence that inflation will decline.  AUD/USD key events todayInvestors will keep absorbing the impact of Australia’s CPI report as no major reports are coming from the US. AUD/USD technical forecast: Bulls set their sights […]

Essentially you have a market that doesn’t know which direction it wants to go, but at this point in time I think it’s somewhat obvious that we are going to consolidate in the . This does make sense considering that there are a lot of concerns out there and we did just fall rather significantly due to the fact that the ECB looks likely to cut rates before the Federal Reserve. Tit-For-Tat Trading?That being said, we now find ourselves in a situation where the is likely to continue to see a lot of tit-for-tat trading here as the Federal Reserve is likely to cut later as well. So really at this point, I don’t see a clear winner here with the exception that the US dollar does get a little bit of a boost due to geopolitical concerns. So perhaps this remains a fade the rally type of trade.(Click on image to enlarge)The  above would be a target if we break above the 1.07 level, but I think also would also end up being a significant barrier. If we break down below the 1.06 level, then the 1.05 level underneath would be a target. While I don’t see that happening easily, it is a very real possibility at this point in time as there are so many things that people will be concerned about overall. This market will continue to see a lot of chop more than anything else from what I see. However, if you are a short-term trader, you might find value […]

The Wall Street Journal posted an article on bank rule changes entitled . The article discusses the Fed’s Discount Window and rule changes to bolster banks in times of need. This bank safety will also conveniently help the Treasury fund the deficit. The Fed’s Discount Window is a direct borrowing line for banks experiencing a cash crunch. It is infrequently used because it signals to banks, depositors, and stockholders that the bank is in trouble. The graph below shows the discount window was used extensively during the financial crisis. Besides two other smaller instances, it has barely been used.If enacted, the new bank rules would force all banks to “preposition billions more in collateral” at the Fed to support future discount window borrowing. The article estimates that the Fed would require collateral matching up to 40% of a bank’s uninsured deposits, accounting for about 45% of the $17.5 trillion commercial bank deposits. Further, the new rules would require the banks to borrow from the window numerous times a year to help remove the program’s stigma.In addition to bolstering the banking safety net, it would also force banks to hold significant collateral balances at the Fed. Collateral for Fed loans is quite often U.S. Treasury securities. Accordingly, this new bank rule is another way to help the Treasury fund its massive deficits and stock of outstanding debt from years past. This is just one plan for the Fed to help the Treasury fund its growing debts. Our Commentary about  sheds light on a […]

The EUR/USD pair rose to 1.0707 on Wednesday, driven by increased local risk appetite and the belief that the currency was significantly oversold against the US dollar. This resurgence indicates a temporary rebalancing in the currency market.In the US, newly published statistics provide fodder for economic analysis. Sales of new homes in March showed a robust increase of 8.8% month-on-month, climbing to 693,000 from February’s 637,000, surpassing expectations. The year-on-year comparison also reflected strength with an 8.3% increase. Additionally, the weighted average price of a sold house in the US rose to USD 524.8 thousand from USD 488.6 thousand in February, pointing to a market that is still vibrant despite elevated interest rates.These indicators are inherently pro-inflationary, suggesting that consumer behaviour has adapted well to elevated interest rates. Continued activity in the housing market is likely to sustain inflationary pressures in the US for an extended period. If interest rates were to be lowered, the attractiveness of buying property would increase further, prompting the Federal Reserve to keep higher rates to temper economic overheating.Despite substantial efforts by the Fed to stabilise price pressures, the US economy shows a high degree of resilience to changed conditions. This adaptability is a mixed blessing, maintaining economic vitality but complicating inflation management.As long as the Fed keeps interest rates at the current peak of 5.5% per annum, the US dollar will likely retain its strength. Any current weakening of the dollar is seen as a temporary adjustment rather than a trend reversal. EUR/USD technical analysis(Click […]

AT&T has reported its first-quarter results for 2024, showcasing a robust performance powered by its 5G and fiber growth initiatives.AT&T Inc. () has reported its , showcasing a robust performance powered by its 5G and fiber growth initiatives. The telecommunications giant announced revenues of $30.0 billion and an adjusted EPS of $0.55, exceeding the EPS expectations of $0.5323. Operating income stood at $5.8 billion, with net income at $3.8 billion.The company also highlighted a significant year-over-year increase in cash from operating activities, which rose by $0.9 billion to $7.5 billion. Capital expenditures were reported at $3.8 billion, leading to a free cash flow of $3.1 billion, showing a remarkable increase of $2.1 billion from the previous year. These figures underscore AT&T’s solid financial health and its ability to generate substantial cash flows, attributing the success to its strategic investments in 5G and fiber broadband services. AT&T’s Q1 2024 PerformanceThe company’s performance this quarter has demonstrated strong growth in its core business areas and highlighted the effectiveness of its investment-led strategy. AT&T reported 349,000 postpaid phone net additions and a record-low first-quarter postpaid phone churn of 0.72%, indicating strong customer retention and acquisition strategies. Additionally, the company saw a significant increase in Mobility service revenues, which rose by 3.3% year over year to $16.0 billion, and Consumer broadband revenues, which grew by 7.7% to $2.7 billion. These results reflect AT&T’s continued focus on expanding its 5G and fiber network coverage, which now spans over 27.1 million consumer and business locations. AT&T Beats EPS Expectations […]