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The markets experienced risk-on sentiment ahead of the BoC policy rate meeting. The BoC is scheduled to hike rates by 75bps on Wednesday ahead of ECB and BoJ meetings. Commodity-backed pairs rallied, preceding better-than-expected Australian inflation data. The US dollar weakness was dominant as investors brace for New Home sales and Goods Trade Balance
EURCAD advanced by +0.11% ahead of BoC policy Meeting in the New York session. The BoC is scheduled to hike rates by 75bps to 4.00% from a previous 3.25% as global inflation continues to bite the economy. The optimism on the Euro is limited despite bulls pricing in a 75-bps rate hike by the ECB on Thursday. The positive French consumer confidence released in the European session helped lift sentiment ahead of ECB day.
Upside gains are capped by 1.3600 and a break above that level could see bulls extend targets to the 1.3700 psychological level. Near-term support is at the 1.3550 level if bulls fail to challenge the near-term resistance.
GBPJPY rallied by +0.34% as the UK Medium-term fiscal plan gets delayed to Nov 17. The market confidence could be coming from the appointment of Rishi Sunak as PM and Hunt as Chancellor. The weakness in the Japanese yen is a major tailwind for GBPJPY bulls in the near term as investors brace for the BoJ Monetary Policy statement on Friday. The pair broke above the 170.00 level making a fresh 6-year high at 170.500 and there is a possibility for upside gains if near-term resistance fails to hold.
AUDUSD soared by +1.22% as hotter-than-expected inflation in Australia lift the sentiment of RBA tightening. The Australian CPI QoQ rose to 1.8% against 1.6% surveyed while YoY data surged to 7.3% vs 7.0% forecasted. The Aussie benefitted from dollar weakness as prospects of Fed tightening fades. The US Consumer Confidence fell to a 3-month low on Tuesday weighing down the dollar in the near term. The risk-sensitive Aussie rallied towards the 0.6550 level as bulls reclaimed the 0.64000 level. There will be a release of US Trade balance data and New Home Sales in the New York Session.
European stocks were mixed as traders closely watch European bank earnings. FTSE100 was down -0.21% and upside gains are capped by the 7050 level, while downside targets are at 6900. DAX surged by +0.66% after the bulls claimed the 13000 level and the next target is at the 13400 level. The 12825 level remains in near-term support. CAC40 extended targets by +0.44% above the 6150 barrier and bulls could target the 6400 level.
US stock futures trimmed gains as big tech earnings results disappoint. However, there is still room for upside momentum as the dollar continues to weaken. Nasdaq100 futures slumped by -0.40% weighed down by Alphabet and Microsoft’s disappointing results. However, sentiment remains positive as bulls defend the 11400 and a break above the 11600 level could trigger buying pressure towards the 12000 psychological level.
DJIA index futures remained steady at -0.02% after closing above the near-term resistance at the 31500 level. To the upside, 32500 becomes the next target. S&P500 futures edged lower by -0.16% although bulls remain resolute above the 3800 previous resistance-turned-support and the 3900 level remains a possibility if the level holds.
Bitcoin rallied by +2.43% as Buyers’ price-in beginning of a seasonal shift as dollar weakness persists. The cryptocurrency breached a 6-week high at the 20400 level and upside gains are capped by the 22500 level.
