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MTrading Team • 2022-12-07

USDCAD grinds higher as cautious optimism contrasts with the pre-BOC anxiety

USDCAD grinds higher as cautious optimism contrasts with the pre-BOC anxiety

A lack of major data/events and mixed concerns surrounding the global economic transition and the key central banks’ next moves weighed on the market sentiment the previous day. However, China’s announcements of fresh Covid policy and downbeat data from Australia and Beijing, as well as softer US trade numbers, favored the latest risk-on mood.

Even so, the US Dollar grinds higher during the three-day uptrend while commodities remain directionless. That said, the prices of gold print mild gains but those of crude oil remain pressured toward the yearly low amid a three-day downtrend.

USDCAD gains major attention amid downbeat oil prices and hopes of BOC’s easy rate hike. Alternatively, USDJPY renews its weekly high as traders remain mildly positive, backed by headlines from China.

Elsewhere, the leading cryptocurrencies turned bearish amid fears of recession, as well as chatters that the cryptos will be regulated as securities.

Following are the latest moves of the key assets:

  • Brent oil remains pressured near $80.00 during three-day losing streak.
  • Gold rises for the second consecutive day, mildly bid near $1,775 at the latest.
  • USD Index struggles during three-day uptrend around 105.60.
  • Wall Street closed on the negative side and so do the stocks in Europe and the UK.
  • BTCUSD drops to one-week low near $16,760 whereas ETHUSD prints 3.25% intraday losses near $1,230.
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China tries to defend bulls amid sluggish markets

China finally unveils details of how it will ease the three-year-long Zero-Covid restrictions. The same offered a floor to the riskier currencies and stops equity bears from tracking Wall Street’s losses. Even so, the firmer yields and chatters surrounding global economic slowdown underpin the US Dollar’s run-up.

As a result, gold struggles to cheer the cautious optimism in the market while crude oil drops for the third consecutive day while poking a yearly low.

USDCAD grinds higher and so does the USDJPY but AUDUSD failed to portray the impacts of downbeat Aussie GDP and China trade numbers. Further, NZDUSD also remains firmer but GBPUSD, USDCHF and EURUSD remain mostly directionless.

Equities in the Asia-Pacific region traded mixed but those in Europe and the UK print mild losses. Further, the BTCUSD and ETHUSD are down the most in over a week as recession woes join fears of hard regulations.

  • Strong buy: GBPUSD
  • Strong sell: ETHUSD, USDJPY
  • Buy: USD Index, USDCAD, Nasdaq, EURUSD
  • Sell: DAX, FTSE 100, gold, BTCUSD, AUDUSD

BOC is the key

Although second-tier data from Eurozone may entertain market players, as well as the headlines surrounding China and Russia, major attention will be on how the Bank of Canada (BOC) will manage to announce the rate hike and signal the end of monetary policy tightening.

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