USD/CAD => The index falls to a 2-week high
HP => The stocks jumped 14% yesterday
EUR/USD => The pair falls towards 1.08
USD/CAD steadies ahead of unemployment data
USD/CAD rose for a second day on Thursday and is set to rise 0.6% across the week, its second straight week of gains.
Over the past two weeks, the loonie has lost ground as oil prices tumbled 15% on easing supply fears. Meanwhile, the US dollar has been boosted by the hawkish minutes of the latest Fed meeting. Expectations for a 50-basis point interest rate increase in May are 80%.
Furthermore, the Federal Reserve plans to trim its balance sheet rapidly to around $95 billion a month. US jobless claims were at the lowest level in over 50 years, highlighting how tight the jobs market is and supporting a more aggressive path to tightening monetary policy.
Today attention will move to the Canadian jobs market, which is expected to show solid job creation of 80k after 330k in February and a drop in unemployment. Next week, buoyant jobs data could boost the loonie ahead of the BoC rate decision.
|US jobless claims
|Actual: 166k (5k)
Expected: 5.4% (0.1%)
Where next for the USD/CAD?
USD/CAD fell below rising trendline support at the end of March, falling to a low of 1.2403 on Tuesday before rising to a high of 1.26, above its 20 SMA and capped at the 200 SMA and the rising trendline support, which now acts as immediate resistance.
The 20 SMA has crossed below the 200 SMA in a bearish sign. However, the RSI is neutral, suggesting consolidation.
Sellers would look for a break below the 20 SMA at 1.2570 to test 1.2470 and then to 1.2403.
Buyers will need a break above 1.26, which could prove to be a tough nut to crack, ahead of 1.2780, a level that offered resistance on several occasions across January and February
HP shares jumped 14%. Here’s why
HP shares rallied to an all-time high on Thursday and closed up 14% after Warren Buffet’s Berkshire Hathaway revealed an 11% stake in the company worth $4.2 billion, making it the largest shareholder.
Berkshire Hathaway is one of the world’s most respected investors, so an investment in HP could be considered a seal of approval, lifting demand for the PC and printer maker, which has lagged behind other big tech rivals, rising just 50% since 2009.
This move by Berkshire Hathaway is particularly intriguing because Buffett has broadly steered clear of tech stocks, apart from his Apple holding. There is a good chance he considers HP to be a mature, modestly valued cash cow rather than a high-growth risky fledgling.
EUR/USD falls for a 7th day
The minutes from the latest ECB meeting came from a meeting that saw the central bank adopt a more hawkish tone.
As such, the minutes also had a more hawkish tone, with several policymakers in favor of adopting immediate action to tame soaring inflation. The minutes also showed concerns that the ECB staff projections were underestimating inflation.
Despite the more hawkish tone, the EUR fell versus both the USD and the GBP. Meanwhile, the USD was boosted by solid data and Fed speakers, paving the way for a more aggressive Fed.
Today the pair is falling again in what is expected to be a quiet day, given the light economic calendar on both sides of the Atlantic.
Support can be found at 1.08 (2022 low) and 1.0730 ( April ’20 low).
Resistance for the pair can be seen at 1.0950 (March 28 low) and 1.10 (round number).
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