Fed Sends Dollar Higher; Bullish Activity In Cryptocurrency

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A Hawkish Fed Sends The Dollar Higher; Bullish Activity In Cryptocurrency Market

The FOMC statement produced no changes to policy or outlook. The news, as a whole, is good for the market as it gives affirmation of positive economic growth and outlook for growth. The news is bullish for the dollar because outlook/expectation the FOMC would slow the pace of rate hikes had crept into the market. With high rates holding back real estate sales it looks like the FOMC could cause the economy to stall. The problem for them is that inflation is still on the rise and they need to take care of that.

The Producer Price Index jumped 0.6% in October, more than double the expectation and 3X times hotter than the previous month, as input prices continue to rise. At the core level PPI rose a hotter than expected 0.5% as prices for basic materials at all levels show increased upward pressure in prices. The data is bullish or the dollar because it supports the FOMC’s decision to stand pat on rate hikes and may even increase the odds for a hike at the next meeting.

The EUR/USD moved lower on the news ad is approaching support at the 1.1300 level. The Dollar Index moved up more than 0.5% immediately following the FOMC release and is indicated higher. The PPI data had it edging higher in early trading and the indicators are rolling into a bullish trend-following signal. A move up will likely find resistance at the $97.20 level, a move above that would be bullish.

Bullish Activity In Cryptocurrency Market You Need To Know About

There are two tokens exhibiting overtly bullish activity in the cryptocurrency market. The first is the Basic Attention Token which has been moving higher since Coinbase announced it would support the ERC-20 token. The BAT/USD advanced more than 125% over the past four weeks but has since fallen to retest support at a key level near 0.2950.

While Coinbase is a driving factor in this coins move it is not the only one. The BAT is the native token of the Brave Browser system and both are gaining attention. The Brave Browser is a privacy-oriented web browser that pays users to watch ads, payments are made in BAT, and those payments can be redeemed for cash or to reward advertisers and publishers for their performance. Brave is expected to have +5 million users by the end of this year.

The other token on the move is RCN, otherwise known as the Ripio network. Ripio is a peer-to-peer lending service that allows vetter borrowers use lent capital to purchase Bitcoin. It is headquarterd in South America and intended to service markets in that region. With BTC in wide use there is no reason this token won’t see big gains. The RCN/USD formed a bottom in August and September and about to confirm reversal. It is fighting with resistance at the $0.038 level, a break above that would be very bullish and likely take it up to $0.0525 in the near-term.

Bullish Fed Sends Canadian Dollar To 8-Week Low

The Canadian dollar has posted losses in the Friday session, following the trend seen on Thursday. Currently, USD/CAD is trading at 1.3195, up 0.31% on the day. The pair is trading at its highest level since early September. There are no Canadian events on the schedule. In the U.S., PPI and Core PPI are both expected to post gains of 0.2% for October, unchanged from the September readings. As well, UoM Consumer Sentiment is forecast to slow to 98.0 points.

After the intense excitement surrounding the U.S. mid-term elections, the Federal Reserve meeting paled in comparison. The markets were not expecting much drama, as it was not really a “live meeting” – there was virtually no chance of a rate hike and no press conference from Fed chair Jerome Powell. Fed policymakers continued to sound hawkish in the rate statement, in a similar vein to the previous statement in September. Fed policymakers noted that job creation is solid, unemployment is down and consumer spending has been growing. The one caveat to this rosy picture was that business investment has slowed. The statement added that further “gradual increases” are expected, given that headline and core inflation are close to the Fed target of 2 percent. The Fed next convenes in mid-December, with the CME Group pegging the odds of a December rate hike at a strong 76 percent.

A red-hot U.S economy has helped boost the Canadian economy, which continues to perform well. This was underscored on Thursday by a superb reading from Ivey PMI, a key gauge of economic activity. The indicator surged to 61.8 in November, up sharply from 50.4 in October. This reading easily beat the estimate of 50.9 points. Earlier this week, Bank of Canada Governor Stephen Poloz said that the Bank would continue gradually raising rates from the current 1.75% to a “neutral stance” of between 2.5% and 3.5%. The magic question for investors is how quickly the BoC will move in this direction. The BoC has raised rates some five times in the past 15 months, and upcoming rate hikes will help make the Canadian dollar an attractive option for investors.

USD/CAD Fundamentals

Friday (November 9)

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  • 8:30 US PPI. Estimate 0.2%
  • 8:30 US Core PPI. Estimate 0.2%
  • 9:05 US FOMC Member Randal Quarles Speaks
  • 10:00 US Preliminary UoM Consumer Sentiment. Estimate 98.0
  • 10:00 US Preliminary UoM Inflation Expectations

*Key events are in bold

USD/CAD for Friday, November 9, 2020

USD/CAD, November 9 at 6:15 EST

Open: 1.3154 High: 1.3198 Low: 1.3141 Close: 1.3195

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2831 12970 1.3099 1.3198 1.3292 1.3383

USD/CAD ticked higher in the Asian session and the trend has continued in European trade

  • 1.3099 is providing support
  • 1.3198 has switched to a resistance role following gains by USD/CAD on Friday. It remains a weak line
  • Current range: 1.3099 to 1.3198

Further levels in both directions:

  • Below: 1.3099, 1.2970, 1.2831 and 1.2733
  • Above: 1.3198, 1.3292 and 1.3383

USD/CAD: Bullish Fed Sends Canadian Dollar To 8-week Low

The Canadian dollar has posted losses in the Friday session, following the trend seen on Thursday. Currently, USD/CAD is trading at 1.3195, up 0.31% on the day. The pair is trading at its highest level since early September. There are no Canadian events on the schedule. In the U.S., PPI and Core PPI are both expected to post gains of 0.2% for October, unchanged from the September readings. As well, UoM Consumer Sentiment is forecast to slow to 98.0 points.

After the intense excitement surrounding the U.S. mid-term elections, the Federal Reserve meeting paled in comparison. The markets were not expecting much drama, as it was not really a “live meeting” – there was virtually no chance of a rate hike and no press conference from Fed chair Jerome Powell. Fed policy-makers continued to sound hawkish in the rate statement, in a similar vein to the previous statement in September. Fed policy-makers noted that job creation is solid, unemployment is down and consumer spending has been growing. The one caveat to this rosy picture was that business investment has slowed. The statement added that further “gradual increases” are expected, given that headline and core inflation are close to the Fed target of 2 percent. The Fed next convenes in mid-December, with the CME Group (NASDAQ: CME ) pegging the odds of a December rate hike at a strong 76 percent.

A red-hot U.S. economy has helped boost the Canadian economy, which continues to perform well. This was underscored on Thursday by a superb reading from Ivey PMI , a key gauge of economic activity. The indicator surged to 61.8 in November, up sharply from 50.4 in October. This reading easily beat the estimate of 50.9 points. Earlier this week, Bank of Canada Governor Stephen Poloz said that the Bank would continue gradually raising rates from the current 1.75% to a “neutral stance” of between 2.5% and 3.5%. The magic question for investors is how quickly the BoC will move in this direction. The BoC has raised rates some five times in the past 15 months, and upcoming rate hikes will help make the Canadian dollar an attractive option for investors.

USD/CAD for Friday, November 9, 2020

USD/CAD, November 9 at 6:15 EST

Open: 1.3154 High: 1.3198 Low: 1.3141 Close: 1.3195

USD/CAD Technical

S3 S2 S1 R1 R2 R3
1.2831 12970 1.3099 1.3198 1.3292 1.3383

USD/CAD ticked higher in the Asian session and the trend has continued in European trade

  • 1.3099 is providing support
  • 1.3198 has switched to a resistance role following gains by USD/CAD on Friday. It remains a weak line
  • Current range: 1.3099 to 1.3198

Further levels in both directions:

  • Below: 1.3099, 1.2970, 1.2831 and 1.2733
  • Above: 1.3198, 1.3292 and 1.3383

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

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