Strong US and weak Chinese data in focus ahead of the BoC

Table of Content:

USD/CAD => The pair rises towards 1.32
BTC/USD =>The cryptocurrency falls below $19k
Gold => The commodity falls below 1700

USD/CAD awaits the BoC rate decision

USD/CAD rose 0.1% in the previous session after upbeat services data boosted the USD and as the loonie traced oil prices lower.

Oil fell over 2.5% as worries about the demand outlook overshadowed the OPEC+ production cut agreed at the start of the week. Today the pair is rising for a third day as oil prices tumble following weak data from China and attention shifts to the BoC interest rate announcement. The central bank hiked rates by 1% at the last meeting catching the market off-guard as a 75 basis point hike was expected.

While concerns over inflation becoming embedded drove expectations of a 1% rate hike again in September, more recently, data has shown that inflation could be cooling, as well as economic growth slowing. As a result, rate hike expectations have now slipped back to 75 basis points.

Where next for USD/CAD?

USD/CAD has traded within an ascending channel since early April.

In its latest leg, higher, the pair rebounded off 1.2727 on August 11, rising above the 20 & 50 sma. The 20 sma crossing above the 50 sms combined with the bullish RSI supports further gains.

Buyers will look to rise above 1.3220, the 2022 high, to target 1.3375, the upper band of the rising channel. Sellers will look for a move below support at 1.3080 horizontal support to expose the 20 sma at 1.30. A move below 1.29 negates the near-term uptrend.

BTC/USD crashes through support

After consolidating around 20k for the past few sessions, BTC/USD is on the move again.

The cryptocurrency has crashed through support at 19600 and now trades over 5% lower across the past 24 hours. The break below this key technical level came after the US ISM non-manufacturing monthly index unexpectedly rose in August. The stronger-than-expected data fueled bets that the Federal Reserve will act more aggressively to hike interest rates to tame surging inflation.

Good US data is bad news for bitcoin as it paves the way for more Federal Reserve tightening. In a double whammy of bad news, strong US data has been followed by weak Chinese data, which has hit risk sentiment across the globe. China’s trade surplus shrunk more than expected in August amid sluggish manufacturing and COVID disruptions.  With risk aversion, dominating bitcoin bears are in the driving seat. Seller will now target 17600, the 2022 low, to extend the bearish trend.

Gold falls on USD strength & Fed hike bets

Gold fell for a second straight session yesterday after stronger than anticipated US ISM non-manufacturing data prompted bets of a more aggressive Federal Reserve.

The service sector data rose for a second consecutive month thanks to strong order growth. Supply chain bottlenecks and price pressures also eased, suggesting that the US economy was holding up much better than initially feared and is more able to absorb more extensive rate hikes. This is bad news for non-yielding gold.

Today the precious metal continues to decline as the USD dollar, the safe haven on choice, powers higher above 110.00. US Fed speakers will be under the spotlight as the market watches for clues on what to expect from the September FOMC.

Support can be found at 1688 (September low) and 1680 (July low).

Resistance for the pair can be seen at 1700 (round number) and 1726 (weekly high).