Tuesday, January 25, Markets Overview

Awaiting for the FED Announcement

The US markets are  gearing up for the major news release, the Fed Interest Rate Decision announcement tomorrow, January 26. A rate hike tends to boost the local currency, as it is understood as a sign of a healthy inflation. A rate cut, on the other hand, is seen as a sign of economic and inflationary woes and, therefore, tends to weaken the local currency. If rates remain unchanged, attention turns to the tone of the FOMC statement, and whether the tone is hawkish, or dovish over future developments of inflation. Following the rate decision, the FOMC releases its statement regarding the monetary policy. The statement may influence the volatility of the USD and determine a short-term positive or negative trend. A hawkish view is considered as positive, or bullish for the USD, whereas a dovish view is considered as negative, or bearish.

Bank of Canada Announcement

In Canada, BoC Interest Rate Decision will be announced on Wednesday 26th, a reading below 0.25% will be bearish for the loonie; however, a reading above the estimated rate will be bullish, this report will be announced after Bank of Canada publishes a study of economic movements in Canada. It indicates a sign of new fiscal policy. Any changes in this report tend to affect the CAD volatility. If the BoC report shows a hawkish outlook, that is seen as positive (or bullish) for the CAD, while a dovish outlook is seen as negative (or bearish).

On the other hand, geopolitical fears surrounding Russia and Ukraine escalate as Moscow refrains from accepting the global pressure towards a ceasefire even as political leaders warn of economic sanctions. This news will have a major effect on Crude oil prices.

WTI Movement

Extending the late Monday’s recovery, WTI picks up towards $84.00 during the initial Asian session on Tuesday. On the uptrend a break above $84.00 will direct the oil to move towards the next mark at $85.30, to test the recovery moves. A break above this level will lead the crude oil to trade surrounding the next resistance at $86.95; moreover, a break above this level may offer an intermediate halt during the run-up to the $90.00 psychological magnet. Alternatively, a pullback move may initially aim immediately to the support level at $81.10 before eyeing the $80.00 round figure. A break below the round figure will challenge further weakness of the commodity and direct it to the last support level at $76.75.

USDCAD Struggle

The Loonie pair struggles to find a balance between the risk-off mood and hawkish headlines for Canada’s key export item, WTI crude oil, amid sluggish trading hours. USD/CAD retreated from intraday high to 1.2645 ahead of Tuesday’s European session. if US stocks keep dropping at the present rate, it’s only a matter of time. A break above 1.2700 would open the door to a test of the next major area of resistance around 1.2800. Alternatively, if crude oil keeps its bullish movement, and since WTI and USDCAD follow a negative trend, the price of this pair will drop, finding initial support at 1.2620, followed by 1.2585, a temporary cap on the way up. Further down, 1.2555. Overall, a return to the 1.2555-1.2585 range is on the cards. 

This week is promising a range of trading opportunities, and OneRoyal is here to bring you overviews, information and support.

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Disclaimer: This article is not investment advice or an investment recommendation and should not be considered as such. The information above is not an invitation to trade and it does not guarantee or predict future performance. The investor is solely responsible for the risk of their

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