Rates Spark: Risk-off Reflexes At Work

Economic

Summary:

The prospect of an escalation in Ukraine has led to a higher demand for Bunds, bringing the Bund swap spread close to zero. However, the underlying factors that caused the Bund swap spread to turn negative are still present, as shown by similar trends in the USD/EUR cross-currency basis.

Bunds in demand as Ukraine faces uncertain times

Over the past month, markets have rapidly adjusted to the realities of post-QE and QT. This is most evident in Bund swap spreads, but similar trends were also seen in the USD/EUR cross-currency basis, which has shared the same pattern as risk-premia into the looming year-end was reassessed. The shared trends suggest that concerns about German credit amid political instability were less influential, though they likely contributed to the overall movement.

Tuesday’s market reaction to headlines pointing to an escalation in the Ukraine conflict showed that the risk-off reflexes are still working. Bunds were the main recipient of safe-haven flows, outperforming other European government bonds with the 10y initially outperforming versus swaps by almost 4bp. The 10Y yield still sits slightly above swaps and time will tell how lasting the move will be or whether it is seen as an opportunity to jump back on the Bund underperformance trade. So far, the spread performance has been more resilient than the immediate reaction to headlines. However, recent history has shown that Bunds have had a weaker and shorter-lived response to risk-off events, such as the French election turmoil.

We still think that the levels broadly around 5bp above swaps could mark an equilibrium around which 10y Bund spreads evolve with risk-off episodes and supply as well as political turmoil continuing to add volatility. Recall that the equivalent spread of around 20bp above OIS was last observed in 2014 ahead of the European Central Bank's QE.

Today’s events and market view

UK October CPI data this morning came in hotter than expected with services inflation at 5% year-on-year and core CPI at 3.3% versus an estimated 3.1%. However, leaving out categories the Bank has told us it cares less about, our economist calculates that this "core-services" measure fell from 4.8% to 4.5%.

The data calendar remains lighter after the release of the UK CPI in the morning, although the ECB will release its indicator for negotiated wages in the third quarter today. A rise here, mainly given developments in Germany, is likely to garner some headlines amid markets that have become a tad more cautious about pricing aggressive easing from the ECB. We still think Friday’s PMIs will be key. Also look out for more commentary from ECB members, including de Guindos and Stournaras, while the ECB will also release its Financial Stability Review.

In primary markets, Germany will tap two bonds in the 30Y part of the curve for €1bn each. Later the US Treasury will sell a new 20Y bond for US$16bn.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Cryptocurrency

Bitcoin’s potential climb to the $100,000 price level has captivated investors for years. While retail participants often celebrate such psychological milestones, the key impact should come from institutional adoption and advancements in the Bitcoin derivatives markets. Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_1

Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_1

Bitcoin futures aggregate open interest, BTC. Source: CoinGlass

Futures open interest on Bitcoin presently totals 626,520 BTC ($58 billion), a 15% increase in two months, signaling growing interest in derivatives. If Bitcoin reaches $100,000, this open interest would hit $62.5 billion, representing 3.1% of its $2 trillion market cap. This contrasts with the S&P 500, where $817 billion in futures open interest equals only 1.9% of its $43 trillion market cap.

A direct comparison between Bitcoin and S&P 500 futures is unfair, as over 65% of the cryptocurrency trading occurs on crypto-only exchanges such as Binance, OKX and Deribit. This number is expected to reduce as spot Bitcoin exchange-traded funds (ETFs) eventually launch their own futures markets, especially those offering in-kind creation that appeal to institutional investors.

However, regulation alone doesn’t guarantee adoption. For example, the CBOE offered Bitcoin futures from December 2017 to March 2019, only to discontinue the product due to low demand. Recent approvals for spot Bitcoin ETF options signal progress but underscore the need for deeper integration with traditional finance markets.

Institutional adoption: The key to $100,000 and higher

Institutional adoption is critical to translating Bitcoin's $100,000 milestone into meaningful derivatives market growth. Spot ETF options, for instance, could enable complex strategies like income generation through covered calls or hedging liquidity risks. As institutions grow more comfortable with Bitcoin as a reserve asset, the derivatives market will likely evolve to accommodate their sophisticated needs. Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_2

Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?_2

Example of covered call expected return. Source: CME

Futures markets often confuse newcomers, particularly regarding the short positions. Many assume these positions signal bearish sentiment, but that’s not always the case. Strategies like cash and carry, where investors lock in a risk-free profit by selling futures while holding spot Bitcoin, create a large volume of short contracts. These strategies stabilize the market rather than betting on price declines.

A potential game-changing catalyst for Bitcoin's price surge could come from a shift in corporate governance. Microsoft shareholders recently voted to allocate funds toward Bitcoin, signaling a significant display of intention by influential investors. Even if the plans are not approved in 2025 or are disregarded by the board, the mere act of voting on Bitcoin allocation creates momentum that could pressure other companies to follow suit.

Additionally, Senator Cynthia Lummis’ proposal to convert US Treasury gold certificates into Bitcoin and create a “Strategic Bitcoin Reserve” offers another price catalyst. Her bill includes plans to acquire 5% of the total Bitcoin supply—1 million BTC—to be held for 20 years, further cementing Bitcoin’s potential as a reserve asset.

Bitcoin derivatives markets are a consequence, not a cause

Despite the excitement surrounding Bitcoin’s march toward $100,000, derivatives markets are more likely to react to broader adoption than drive it. Retail and corporate fears of fiat debasement remain the primary motivators pushing Bitcoin higher. This psychological shift—more than any futures product or spot ETF—will ultimately solidify Bitcoin’s role in institutional portfolios.

Lyn Alden’s research reinforces this narrative, showing a correlation between the global M2 money supply and Bitcoin's price. When governments accelerate monetary stimulus or reduce interest rates, investors increasingly seek scarce assets like Bitcoin as a hedge against debasement.

As a result, a liquid and mature derivatives market will emerge as a consequence, not a cause, of Bitcoin’s price breakthroughs.

Source: Cointelegraph

Risk Warnings and Disclaimers

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UBS

Economic

Diversification is the beating heart of any multi-asset portfolio. Assets that have low or negative correlation move in different directions and help smooth overall returns; one part of a portfolio offsets and provides ballast against others. Understanding correlations is therefore essential.

From 1950 to 2000 US Treasuries were positively correlated with equities – only for that to flip negative for the next 20 years. Recently, the relationship has turned positive again.

A number of questions flow from this. Is there something about the current regime that means historical correlation relationships will continue to break down? If so, what does this mean for asset allocation? And is achieving natural diversification going to get harder?

In the case of the latter, there are many reasons to believe it might be. From rising geopolitical tensions, extreme US debt levels, demographic reversals with structural implications for higher inflation, and the move to a more multi-polar world order (one perhaps less reliant on the US dollar), there are several seismic shifts happening.

Before conjecturing on what this might mean for portfolio diversification and while also acknowledging that the past is not prologue, we crunched the data in search of asset correlations lessons at various stages of the market cycle. The results confirm that the relationship between ’risk assets’ and ’safe assets’ is not linear.

Non-linear correlations

We analyzed monthly data for a variety of indexes in listed assets between August 1994 and September 2024; for robustness, we also looked at the wider range of index returns at the weekly data frequency, although for a shorter period due to data limitations.

The following illustration shows the behavior of the asset classes in our sample. The top-left chart, a histogram, shows the distribution of the first asset class (namely, US equities). The chart below it, a scatterplot, shows the returns of US equities (horizontal axis) against developed market equities excluding the US. Clearly, the two indexes tend to move together, with positive correlation. In fact, in the mirror-opposite cell of the matrix, we see r=0.84, meaning that the correlation between the two asset classes is 84%. We organized the charts in two panels, 2a and 2b, for readability.

Figure 2a has plenty of unusual patterns. The bottom line represents gold (vertical axis). Gold seems to have little correlation with the other asset classes, and indeed its scatterplots look like clouds, with no pattern emerging. This suggests that gold prices move independently from returns to the other asset classes, and therefore may be a candidate for diversification.

The following line is cash. Cash has different regimes, as confirmed by the histogram at the right-hand side of the bottom row. It shows a bimodal distribution – i.e., a histogram where there are two peaks (left for loose money, right for tight money), and a valley (intermediate monetary conditions, which do not appear to have happened frequently in the last 30 years).

The row of charts above cash represents macro hedge funds (alternative strategies focused on macroeconomic themes and taking concentrated bets on specific markets). The purpose of these strategies is to produce returns without material correlation to the markets in the long term and the results imply they do a pretty good job on average. The same is true for equity market neutral strategies which buy and sell similar stocks if one is expected to go up and the other down.

With commodities, the left-most scatterplot depicts commodities vs. US equities, showing that when equity markets go down (horizontal axis) commodity prices often seem to dampen the fall. However, observing the scale of the vertical axis as well as the histogram to the right, we notice that more than half of the monthly returns to commodities during our sample period were negative. This suggests that, while commodities are a diversifier, a passive buy-and-hold commodity allocation would have lost money over the last 30 years.

Emerging market debt (EMD) denominated in hard currency is on the following row. The histogram is noticeably narrow, indicating low volatility. The beta of the regression line for the scatterplot in the first column is also positive, showing that EMD returns were positive on average when US equity returns were positive, and vice versa. It is therefore hardly surprising that EMD is seen by the market as a risky asset.

Figure 2b is like 2a in the sense that the first row shows US equities, but the remaining assets are new. Let us look at them, again starting from the bottom row, showing developed government bonds excluding the US, which appear to have little correlation to risk assets. Credit, high-yield and investment-grade bonds specifically, are clearly risk assets with a positive correlation to stocks. US government bonds show a slightly negative correlation to risk assets during the last 30 years, and therefore have worked as mitigators of market volatility.

To complete the chart, we have equities from emerging markets and from developed markets excluding the US, which both have a strong positive correlation to the US stock market, showing the existence of a global business cycle.

Segments of market performance

By segmenting our sample to only consider months where equity performance was particularly negative, we can now look at responses in different market conditions.

For the chart above, we only consider months in our sample that were in the bottom 2.5% of the distribution – i.e., when the stock market did worse than 97.5% of the cases. All betas are positive except for that of cash, which is negative but close to zero. This indicates that when stocks fell dramatically in the last 30 years or so, cash tended to remain stable. The only other asset class with a small beta is US credit (investment grade) bonds, a relatively safe asset during market panics.

As Figure 3 shows, both US and non-US government bonds (typically a good refuge during market panics) and hedge funds stand out as these zero-correlation strategies duringmarket routs.

Repeating the exercise with different percentiles offers similar results. However, the beta for US government bonds goes from zero to negative. This suggests the hedging effect may be more substantial for government bonds when the stock market fall is less extreme.

The analysis carried out shows clear diversification benefits in multi-asset portfolios. However, when stock market losses are severe, correlations between assets do appear to increase, muting the benefits of correlation in a traditional portfolio. Alternative asset classes such as hedge funds may help government bonds in achieving diversification benefits.

Importantly, illiquid asset classes such as direct real estate and private equity were excluded from the analysis. This is because their returns are generally quarterly and based on appraisals rather than on market transactions, making a proper statistical comparison impossible.

Inflation effects

The behavior of asset class correlations in different inflation regimes also matters. Inflation serves as both a barometer of economic health and a catalyst for market dynamics. In particular, we analyzed economic environments characterized by extreme inflation, since ordinary correlation patterns between asset classes are generally expected to break down.

As a proxy for inflation, we used the year-over-year changes of the United States Consumer Price Index for Urban Consumers (without seasonal adjustment and available as a monthly time series). Once again, we segment the data into quantiles.

On the left-hand side, we display the average monthly return of each asset class with its average quadratic error (one standard deviation of the mean). On average, independent of the inflation environment, all asset classes but commodities deliver a positive risk premium over cash.

On the right-hand side, the beta vs. US equities is positive and quite large for most risky assets. Cash and US government bonds represent the exception. Government bonds in foreign currencies display a small, yet slightly positive correlation to US equities, most probably coming from foreign currency risk exposures and global inflation cycles.

Next, we analyze asset class returns in the quantile corresponding to the 10% highest inflation environments – i.e., year-over-year changes of US Urban Consumers CPI higher than 4.13%. In such situations, the picture changes quite dramatically.

Does volatility matter?

Next, we analyze asset class returns in the quantile corresponding to the 10% highest inflation environments, that means year over year changes of US Urban Consumers CPI higher than 4.13%. In such situations, the picture changes quite dramatically.

The chart on the left-hand side shows average monthly returns becoming strongly negative for equity indexes. Riskier fixed income assets – such as US credit, US high yield and emerging market hard currency bonds – also show negative average monthly returns. Even ‘safe-haven’ assets, such as US government bonds, provide only a limited degree of diversification as they often have negative returns.

Asset class betas to US equities are again positive and quite large for most risky assets. Interestingly, defensive government bond assets become positive. Therefore, based on the assumption that government bonds should provide diversification to riskier asset classes, traditional multi-asset solutions will most probably encounter performance problems in high inflation environments.All is not lost, however: Figure 5 clearly shows that cash and alternative asset classes might provide diversification benefits. Average monthly returns are positive for cash, commodities, and two of the hedge fund styles designed to act as ’crisis hedge’ providers.

More specifically, commodities do seem to provide some hedge against inflation, whereas their beta vs. US equities decreases. However, the variability of average monthly return is the highest among all asset classes; the hedge therefore may not be as reliable and the effects on portfolio volatility may not be ideal.

The equity market neutral hedge fund style groups long/short portfolios with little market exposure, aiming to generate return mainly by taking idiosyncratic risk (as explained earlier). The second hedge fund style with diversification potential is the macro style, which groups strategies taking long or short positions in different equity, fixed income, currency and commodity markets, mainly with derivative securities, trying to profit from the economic and political outlook for different regions and countries. These strategies appear to provide good diversification.

The findings already discussed for the 10% highest inflation environment hold true for the 5% and the 2.5% equivalents.

Volatility effects

Another variable which influences asset class correlations is implied volatility, the volatility used in option pricing models, such as the Black-Scholes model. Figure 10 shows the historical distribution of VIX levels. We can see that the VIX level distribution is skewed to the right, with historical median at 18.33, and average at 20.06.

We look at the behavior of asset class correlations in different implied volatility regimes, keeping in mind the results earlier. First, we analyze asset class returns in the quantile corresponding to the 10% highest US equity implied volatility levels.

The diversification properties of government bonds continue to hold in high volatility regimes. Conversely, when volatility increases the betas to US equities of most asset classes increase significantly. The exceptions are cash, US government bonds, foreign government bonds and the macro hedge fund style.

Equity market neutral hedge funds appear to suffer in high volatility regimes, with a sharply increasing beta to US equities. This might happen because certain types of equity market neutral strategies, such as statistical arbitrage strategies, aim to identify pairs of correlated stocks and take opposing positions based on their historical relationship – and in high implied-volatility regimes such relationships tend to break.

When we analyzed asset class returns in the 5% and 2.5% quantiles the findings already discussed for the 10% highest inflation environment were mostly confirmed. However, when implied volatility levels become extreme, even the macro hedge fund style stops providing protection. The only ‘safe havens’ in this situation are cash and government bonds.

The future of diversification

Past performance is no guarantee of future results, yet past performance is all we can analyze, and it would be illogical not to. Both inflation and implied volatility clearly influence the behavior of asset class correlations, especially during extreme market conditions. Our observations indicate that in environments characterized by high inflation and elevated volatility, diversification – the primary rationale behind multi-asset strategies – is not constant.

‘Safe’ assets such as government bonds and low-beta hedge funds appear to provide diversification against fluctuations in risk assets. However, the extent of this diversification varies.

We can now ask which types of market stress we can expect in 2025 and beyond. Inflation appears to be retreating around the world, so we do not think this will be a likely trigger of volatility (at least in the short term). However, geopolitical tensions in Eastern Europe and the Middle East are a serious concern and so (from an investment point of view) is the high valuation of US mega-caps.

In the past when geopolitical events – such as the tragic 11 September 2001 events occurred – all risk assets such as stocks and high-yield bonds suffered, while ‘safe-haven’ assets such as government bonds outperformed. Even though the September 11 events had roots in the Middle East, commodity prices did not move very much. Meanwhile, in 2022 when Russian invaded Ukraine, risk assets suffered and ‘safe’ assets outperformed, but commodities had the highest gain due to supply concerns.

In terms of US stock valuations, the dot.com bubble (during a period of low inflation) illustrated the effects of a sudden fall from high stock valuations (note we are not suggesting that the current valuations of the largest US stocks is necessarily a bubble). In 2000-2002, after the market turned away from technology stocks, while risk assets lost en masse, traditional ‘safe’ assets such as government bonds performed quite well, providing good diversification.

Therefore, if investors are concerned about geopolitics and the possible overvaluation of stocks, they should consider a diversified allocation to ‘safe’ assets, starting with liquid (such as government bonds) and possibly extending to private assets. For those that fear an explosion in commodity prices due to geopolitics, a commodity exposure may be helpful, with a focus on energy.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Warren Takunda

Economic

British inflation jumped by more than expected to go back above the Bank of England's 2% target last month and measures of underlying price growth gathered speed too, showing why the BoE is moving cautiously on interest rate cuts.

Consumer prices rose by an annual 2.3% in October, pushed up in large part by an increase in regulated domestic energy tariffs, after a 1.7% increase in September which was the first time the inflation rate had fallen below the BoE's target since 2021.

Sterling was up by almost a third of a cent against the U.S. dollar immediately after the data was published and interest rate futures priced in a slightly slower pace of rate cuts.

The BoE's most recent forecast and a Reuters poll of economists had both pointed to a CPI reading of 2.2% in October.

"These figures confirm a disappointing resurgence in inflation as the recent tailwind from lower energy costs turned into a headwind in October, following the increase in (regulator) Ofgem's price cap which drove a notable jump in household bills," Suren Thiru, Economics Director at accountancy body ICAEW, said.

The increase represented the biggest month-to-month rise in the annual CPI rate since October 2022.

Services inflation - which the BoE views as a key measure of domestically generated price pressure - rose to 5.0% in October from 4.9% in September, the Office for National Statistics said.

The BoE had expected it to rise to 5.0% in October.

Core inflation, which excludes energy, food, alcohol and tobacco, picked up to 3.3% from 3.2% in September.

"While the slight uptick in services price pressures confirms that it remains a significant hurdle to sustainably maintain inflation below target, slowing wage growth and a weakening labour market should help put it on a more consistent downward trajectory," Thiru said.

Chief Secretary to the Treasury Darren Jones said the government was trying to help reduce the cost of living "but we know there is more to do." Science minister Peter Kyle told Times Radio: "This does concern us."

BoE Governor Andrew Bailey on Tuesday stressed the central bank's message that borrowing costs are likely to come down only gradually as policymakers were awaiting clearer signs of how much inflation pressure remains in Britain's economy.

Earlier this month, the central bank said the first budget of Britain's new government was likely to add to inflation next year and beyond as higher taxes on companies were likely to translate into higher prices.

Source: Reuters

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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FOREX.com

Forex

Economic

GBP/USD gives up earlier gains after hotter inflation

GBP/USD rose following UK CPI data before quickly giving back those gains. The pair is unchanged at 1.2680.

UK CPI rose to 2.3% YoY, up from 1.7% in September and ahead of forecasts of 2.2%. On a monthly basis CPI rose 0.6% ahead of the 0.5% forecast. Core inflation also rose to 3.3%.

UK inflation was hotter than expected in October, creating a headache for the BoE. Higher energy prices were a key factor, as was hotter than forecast services inflation, a marker policymakers are watching closely.

The hotter inflation comes as BoE governor Bailey has already warned that rates may be cut at a slower pace owing to the uncertain outlook for consumer prices after Labour’s Budget.

A December rate cut is not expected, and the BoE will likely cut rates at a more gradual pace next year, lifting GBP while pulling the FTSE lower.

Markets lowered rate cut expectations to just 60 basis points through the end of 2025, down from multiple rate cuts expected just a few weeks ago.

The US dollar is heading higher, recovering after a bout of profit-taking in recent days. A lack of fresh catalysts saw the greenback ease away from its yearly high reached last week.

Today, the USD is resuming the uptrend, boosted by expectations that the Federal Reserve will cut interest rates at a more gradual pace over the coming year owing to economic resilience and expectations of inflationary policies from Trump.

The market is carefully examining Trump's cabinet selections, particularly the yet-to-be-announced Treasury Secretary position.

The U.S. economic calendar is quiet again today, but fed speakers will be in focus as attention turns to PMI data later in the week.

GBP/USD forecast- technical analysis

GBP/USD found support at the 1.26 round number and the falling trendline dating back to August 2021. The price corrected higher but failed to sustain the move above 1.27 and continues to trade in the familiar range of 1.26 – 1,27. The RSI is below 50, supporting further downside.

Sellers will look to take out the 1.26 support, opening the door towards 1.25.

On the other hand, resistance can be seen at 1.27, a rise above here exposes the 200 SMA at 1.2820.

GBP/USD, DAX Forecast: Two Trades to Watch_1

DAX rises as geopolitical worries ease, Nvidia earnings come into focus

The DAX opened higher on Wednesday, recovering from yesterday's sell-off as fears over the Russian-Ukraine conflict eased.

News yesterday that Russia had updated its nuclear policy, lowering the threshold for a nuclear war had hurt risk sentiment. The ramping up of geopolitical tensions came amid ongoing jitters surrounding possible U.S. trade tariffs when Trump takes power next year. Europe is in the firing line on both accounts.

Today, the mood is more upbeat as investors look ahead to new Nvidia earnings after the close in the US. Earnings from the eye darling will be a litmus test for the AI trade, which has helped stocks rally to all-time highs this year.

On the economic calendar, German producer prices fell 1.1% year on year in October after falling 1.4% in September. The reading was in line with expectations and supports the view that the ECB could cut rates by a further 25 basis points in the December meeting.

ECB president Christine Lagarde is due to speak later today.

DAX forecast – technical analysis

The DAX has fallen far from its all-time high of 19,684, breaking below 19,500 and forming a series of lower lows. The price has taken out the 50 SMA but continues to close above support at 19,000. The long lower wick on recent candles suggests that selling demand was weak at the lower levels.

Sellers will need a close below 19,000 and to take out 18,810, the November low, to extend losses to the 100 SMA at 18,750 and the 200 SMA at 18,500.

Should buyers successfully defend the 19,000 level, buyers will look to rise towards 19,500. A rise above here creates a higher high and brings 19684 and fresh record highs into focus. GBP/USD, DAX Forecast: Two Trades to Watch_2

GBP/USD, DAX Forecast: Two Trades to Watch_2

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Justin

Economic

Commodity

Crude oil flows from Kurdistan could return to the market next year, after the Kurdistan regional government and the central Iraqi government in Baghdad agreed a new production sharing agreement that satisfies both sides.

“Previously, the KRG signed several agreements with the federal government regarding oil exports. However, the Iraqi budget law set oil extraction and transportation costs at $6 per barrel, which became a major obstacle to oil exports,” the acting minister of natural resources for the Kurdistan semi-autonomous region told local media publication Kurdistan 24.

Following the negotiations, the extraction and transportation costs were revised up to $20.6 per barrel, of which $16 per barrel would go to companies active in Kurdistan in the first phase of the new agreement, Kamal Mohammad Salih told the publication.

Deliveries of Kurdish crude oil have been suspended for over a year amid a dispute between the central government in Baghdad and Turkey over who had the power to authorize these deliveries.

The impasse followed an International Chamber of Commerce ruling from March 2023. The ICC ruled in favor of Iraq, which had argued that Turkey should not allow Kurdish oil exports via the Iraq-Turkey pipeline and the Turkish port of Ceyhan without approval from the federal government of Iraq.

The original dispute then morphed into the long-running debate between Erbil and Baghdad about how to divide the oil profits between the central Iraqi government and the government of the semi-autonomous oil-rich region.

The latest report out of Kurdistan suggests this may have finally been concluded with a mutually beneficial agreement that features the stipulation for an independent audit the oil extraction and transportation costs for Kurdish oil. “The firm will be given 60 days to determine the actual costs following the budget law amendment,” Salih explained.

Iraq is OPEC’s second-largest oil producer after Saudi Arabia. A solid chunk of its total comes from the fields in the northern Kurdistan region.

Source: OILPRICE

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Alex

Economic

Forex

The USD/CAD pair holds ground after two days of losses, trading around 1.3970 during the European hours on Wednesday. The daily chart analysis indicates that the pair is trending upwards within an ascending channel pattern, suggesting a bullish bias.

The 14-day Relative Strength Index (RSI) is above the 50 level, confirming continued bullish momentum. Additionally, the nine-day Exponential Moving Average (EMA) is positioned above the 14-day EMA, indicating persistent strength in short-term price momentum.

On the upside, the USD/CAD pair faces an immediate resistance at the nine-day EMA of 1.3979 level. If the pair breaks above this level, it may move toward the region around the upper boundary of the ascending channel at the 1.4130 level. A breakout above this channel could reinforce the bullish bias and drive the pair toward the next key resistance level of 1.4173, last seen in May 2020.

Regarding support, the USD/CAD pair could test the immediate 14-day EMA at the 1.3957 level. A break below this level could weaken the bullish bias, putting downward pressure on the pair to test the lower boundary of the ascending channel at the 1.3920 level.

USD/CAD: Daily Chart

Canadian Dollar PRICE Today

The table below shows the percentage change of Canadian Dollar (CAD) against listed major currencies today. Canadian Dollar was the weakest against the British Pound.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.27%	-0.02%	0.65%	0.04%	0.22%	0.35%	0.25%
EUR	-0.27%		-0.29%	0.36%	-0.23%	-0.05%	0.08%	-0.02%
GBP	0.02%	0.29%		0.65%	0.06%	0.24%	0.36%	0.27%
JPY	-0.65%	-0.36%	-0.65%		-0.60%	-0.42%	-0.31%	-0.39%
CAD	-0.04%	0.23%	-0.06%	0.60%		0.18%	0.31%	0.22%
AUD	-0.22%	0.05%	-0.24%	0.42%	-0.18%		0.13%	0.05%
NZD	-0.35%	-0.08%	-0.36%	0.31%	-0.31%	-0.13%		-0.10%
CHF	-0.25%	0.02%	-0.27%	0.39%	-0.22%	-0.05%	0.10%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).

Source: FXSTREET

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Rates Spark: Risk-off Reflexes At Work

Bunds in demand as Ukraine faces uncertain times

Today’s events and market view

Bitcoin to $100K: What Will Milestone Mean for Derivatives Markets?

Bitcoin futures aggregate open interest, BTC. Source: CoinGlass

Institutional adoption: The key to $100,000 and higher

Example of covered call expected return. Source: CME

Bitcoin derivatives markets are a consequence, not a cause

Source: Cointelegraph

The Non-linearity of Diversification

Non-linear correlations

Segments of market performance

Inflation effects

Does volatility matter?

Volatility effects

The future of diversification

UK Inflation Rises by More Than Expected to 2.3% in October

Source: Reuters

GBP/USD, DAX Forecast: Two Trades to Watch

GBP/USD gives up earlier gains after hotter inflation

GBP/USD forecast- technical analysis

DAX rises as geopolitical worries ease, Nvidia earnings come into focus

DAX forecast – technical analysis

Kurdish Oil Exports Set To Return In 2025

Source: OILPRICE

USD/CAD Price Forecast: Finds Initial Support At 14-day EMA Near 1.3950

Canadian Dollar PRICE Today

Source: FXSTREET

Risk Disclosure