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Figure Heloc 
Fundamental
OverviewThe USD strengthened a bit
on Friday following some positive Trump’s comments on China as Treasury yields
bounced and erased the Thursday’s losses. Overall, the US dollar performance
has been mixed as markets have been driven by quick changes in risk sentiment since
Trump’s tariffs threat. On the domestic side, the
US government shutdown continues to delay many key US economic reports. The
dollar “repricing trade” needs strong US data to keep going, especially on the
labour market side, so any hiccup on that front is weighing on the greenback. The BLS will release the US
CPI report on Friday despite the shutdown, so that’s going to be a key risk
event. That will need to be seen in the context of US-China relations and any
negative shock by that time though. If things go south, then the CPI will not
matter much as growth fears will trump everything else. On the CAD side, we got a
strong employment report recently which reduced the probabilities for a cut in
October to 56%. The risk-off sentiment triggered by Trump and some dovish
comments from BoC Governor Macklem last week, increased the probabilities to
86%. It looks like the BoC prefers to cut no matter what in October and bring
their policy rate to the lower bound of their estimated neutral rate, but the
Canadian CPI data today might still trigger some hawkish repricing in case it
surprises to the upside. USDCAD
Technical Analysis – Daily TimeframeOn the daily chart, we can
see that USDCAD is consolidating above the key 1.4018 level. This is where the
buyers are stepping in with a defined risk below the level to position for a
rally into the 1.43 handle next. The sellers, on the other hand, will want to
see the price falling back below the key level to target a pullback into the
major trendline around the 1.3850 level.USDCAD Technical
Analysis – 4 hour TimeframeOn the 4 hour chart, we can
see that we have a minor upward trendline defining the bullish momentum. If we
get a pullback, the buyers will likely lean on the trendline with a defined
risk below it to keep pushing into new highs, while the sellers will look for a
break lower to increase the bearish bets into new lows. USDCAD Technical
Analysis – 1 hour TimeframeOn the 1 hour chart, we can
see that we have yet another minor upward trendline. Again, the buyers will
likely lean on the trendline with a defined risk below it to keep pushing into
new highs, while the sellers will look for a break lower to target a pullback
into the next trendline. The red lines define the average daily range for today. Upcoming CatalystsTodaywe have the Canadian CPI
report, while on Friday we get the US CPI and the US Flash PMIs.
This article was written by Giuseppe Dellamotta at investinglive.com.
đź’ˇ DMK Insight
The recent uptick in the USD, spurred by Trump’s comments and a rebound in Treasury yields, highlights a critical juncture for traders. The mixed performance of the dollar suggests that market sentiment is highly reactive, particularly to geopolitical developments. Traders should be cautious; while the dollar may gain short-term strength, the underlying volatility could lead to rapid reversals. It’s essential to monitor key economic indicators, such as upcoming inflation data and employment reports, which could further influence the dollar’s trajectory. The 10-year Treasury yield is a crucial metric; if it holds above 4%, it could bolster the dollar’s position. Conversely, any dip below this level might signal a shift in sentiment, leading to potential dollar weakness. Additionally, keep an eye on correlated assets like gold and oil, which often react inversely to the dollar. A stronger dollar typically pressures commodities, so if you’re holding positions in these markets, be prepared for possible adjustments. The real story here is the market’s sensitivity to news; traders should stay nimble and ready to pivot as new information emerges.
đź“® Takeaway
Watch the 10-year Treasury yield closely; a sustained move above 4% could strengthen the USD, impacting correlated assets like gold and oil significantly.
