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October 19th - Public opinion polls show that Japanese Prime Minister Sanae Takaichis approval rating has declined following the resignations of cabinet members due to scandals. A poll conducted by All Nippon News Network (ANN) from October 17th to 18th showed that the Takaichi cabinets approval rating dropped 11.2 percentage points to 47.1%, the most significant drop among similar polls conducted by multiple media organizations. A poll by the Yomiuri Shimbun showed her approval rating dropped 2 percentage points to 57%. Last week, Agriculture, Forestry and Fisheries Minister Kazuo Ryō announced his resignation, with media reports alleging he violated election funding regulations; furthermore, he had boasted that he had reduced funding to local governments that did not support his campaign in the February election.On October 19th, the Canadian military confirmed on the 18th that the serious fire that broke out on the 17th at the Wynnewright military base in Alberta, western Canada, was caused by live-fire training. The incident has resulted in the deaths of four soldiers, and 39 others are receiving treatment in hospital, at least 19 of whom are in critical condition. According to the military, the live-fire training conducted on the 17th triggered the grassland fire. Major General Wade Rutland stated that soldiers were conducting live-fire training, including grenade throwing, at a grenade range, and carrying out a tactical exercise that the military refers to as "platoon assault."The yield on Japans 20-year government bonds fell 1.5 basis points to 3.790%.Japanese Prime Minister Sanae Takaichi: Plans to moderately control the issuance of Japanese government bonds.October 19th, Futures News: Crude oil prices fluctuated at high levels, refinery costs remained high, and fuel oil demand was still relatively strong. Refineries increased sales volume and were reluctant to sell at low prices, but downstream buyers were cautious about operating on high-priced resources due to their limited needs. Market buying activity was lukewarm, with upstream and downstream players locked in a battle of wills. It is expected that fuel oil negotiations will remain mostly stable today, with some products experiencing slight price fluctuations depending on their own sales status.

As oil prices fall and investors become risk-averse before the BOC meeting, USD/CAD rises to 1.3200

Daniel Rogers

Sep 07, 2022 16:50

截屏2022-09-07 上午11.31.45.png 

 

The USD/CAD has risen for three consecutive trading days, and it is currently trading near 1.3190, which is the weekly high. To appease buyers near the highest levels in two months prior to the Bank of Canada (BOC) Monetary Policy Meeting, the Loonie pair has recently been applauding rising rates and a risk-aversion wave.

 

Declining prices of WTI crude oil, Canada's principal export, further strengthen the USD/CAD exchange rate as speculators anticipate the fifth BOC rate hike in 2022.

 

WTI crude oil prices have dropped to their lowest level since late January, down 1.70 percent to $85.40 as of press time on the back of recession worries and a stronger US dollar. Market perceptions of the latest production cut by OPEC and its partners, including Russia, known collectively as OPEC+, could add to the downward pressure on commodity prices.

 

In addition to the covid-related pessimism in China and the European energy crisis, improved US data strengthened the hawkish Fedbets and boosted the US dollar.

 

In the United States, the ISM Services PMI rose to 56.7 from 55.1 and above market expectations. In contrast to initial expectations of 45.0 and 44.1, the S&P Global Composite PMI and Services PMI both fell to 44.6 and 43.7, respectively. Still, following the news, the US Dollar Index (DXY) rose to a new 20-year high. There is now a 72.0% possibility of a 50 bps rate hike by the Fed in September, according to the CME's FedWatch Tool, up from 57.0% the day before.

 

The three-day surge in rates for 10-year US Treasuries to 3.25 percent is the highest it has been since June 15. The S&P 500 futures have also dropped to a new seven-week low, falling 0.55 percent intraday to 3,890.

 

The stronger U.S. dollar, declining oil prices, and reduced risk appetite should keep USD/CAD bulls optimistic despite the BOC's expected base rate increase of 75 basis points to 3.25 percent. Consolidating recent gains may be possible for the Canadian currency, however, thanks to hawkish comments from the BOC Rate Statement and softer Fedspeak.


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