Cash injection by the Chinese central bank earlier today looks unlikely to sustain a spur in risk appetite in the financial markets. Looking at the technical inclination of the USD/CAD pair, gains are being had by the US dollar over its Canadian counterpart. The day’s fundamentals are deemed to show a slack in the world’s largest economy, that when added to the earlier release on German labor, are apt to keep market participants caving in to the relative safety of the Greenback. A buy bias is advised for the USD/CAD in the day’s exchanges.
The People’s Bank of China injected a net 365 Billion Yuan ($57.92 billion) into money markets this week. This has been the largest weekly injection in history, as regulators struggle to maintain liquidity without producing inflation as forex inflows slow. The central bank has conducted two separate massive liquidity injections this week, which pushed money rates sharply down in China’s interbank market yesterday as cash flooded into the market. Financial markets reacted positively to this news, but sentiment was soon thereafter dragged by uncertainty over speculations of a bailout for Spain and signs of Europe struggling to find a unified approach to tackling its debt crisis.
The number of jobless claimants in Germany rose for a fourth consecutive month in September as growth in the Euro Zone’s largest economy continues to dwindle. An increase of 9,000 was reported by Destatis, following after an upwardly revised hike of 11,000 for August.
Returning the focus on the US, Durable Goods orders for August are expected to fall by 4.7 percent in August, after expanding by a downwardly revised 4.1 percent in July. Though the core figure is estimated for a slight increase of 0.2 percent, a stronger rebound is still needed to counter the shortfalls of 2.2 percent and 0.6 percent for the months of July and June respectively. Also, unemployment claims is expected to have increased by 378,000 in the week ending September 22, according to a survey of analysts. While the data would be an improvement on the previous week’s 382,000 result, it does little to hide the fact that there continues to be plenty of slack in the labor market. Further, data from the National Association of Realtors is perceived to show that Pending Home Sales fell 0.4 percent in August after an impressive 2.4 percent rise last July.
With the day’s fundamentals seen to elicit demand for refuge assets, a long position is suggested for the USD/CAD. Be wary still of likely technical price corrections in the course of the currency exchanges.
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