USD/CAD is holding steady after four days of gains, on USD strength and ahead of the BoC interest rate decision today at 10 am ET. The BoC is widely expected to raise interest rates by 50 basis points, although the markets are still pricing in a 27% probability of a 25 basis point rate hike. A 50 bps hike would take the OCR to 4.25%, which could be the terminal rate. Investors will be watching closely to see what the BoC says about future rate hikes and where the terminal rate could be.
The loonie has fallen this week ahead of the meeting. However, this was more to do with tumbling oil prices and USD strength.
Where might the USD/CAD price head to?
USD/CAD rebounded from 1.3380, the weekly low, rising above support at 1.35 and the 50 sma. The price is attempting to break above the multi-month rising trendline at 1.3660, which, combined with the bullish RSI, keeps buyers hopeful of further upside. Buyers need to rise over 1.3660 to target the November high of 1.38 and 1.3980, the 2022 high. On the downside, sellers could look for a move below 1.35, the October low, to bring 1.3380, the weekly low, into focus. A break below here creates a lower low and 1.33 the 100 sma.
Apple fell 2.5% yesterday. Here’s why
Apple fell sharply on Tuesday as investors assessed the potential impact of disruptions in the Foxconn factory last month. The Foxconn assembly plant, also known as iPhone city, is where Apple iPhones, particularly the high-end phones are put together. The factory output has been greatly affected by zero-COVID restrictions and staff protests. Foxconn said the China plant won’t return to full production until late December or early January after revenue dropped 29% in November compared to October.
Apple is counting the costs, with some estimates suggesting that Apple will likely see a shortfall of 6 million iPhone Pro units this year due to supply chain constraints. Apple is also reportedly looking to move production or at least some production out of China.
DAX falls ahead of GDP data
The DAX has fallen away from a six-month high reached earlier in the week amid rising concerns that the Federal Reserve will act aggressively to raise interest rates. Hawkish Federal Reserve bets have weighed on risk sentiment across the board. Not even better than expected German data yesterday could boost the DAX. German factory orders unexpectedly rose 0.8% after falling 4% in September, suggesting that the looming German recession could be milder than initially feared. Today attention shifts to the eurozone GDP data, which is expected to show that the eurozone economy grew in the third quarter to 0.2% QoQ, down from 0.8%, but narrowly avoiding contraction. This is the third Q3 GDP reading answer and is not expected to be as market-moving as earlier readings.
- Support could be seen at 14240 (weekly low) and 13975 (August high).
- Resistance could be seen at 14600 (last week’s high) and 14710 (June high).
