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U.S. Dollar And Bitcoin On The Rise, USD/CAD Under Pressure

By NAGA (Michalis Efthymiou)Market OverviewAug 12, 2022 10:08AM ET
www.investing.com/analysis/us-dollar-and-bitcoin-on-the-rise-usdcad-under-pressure-200628441
U.S. Dollar And Bitcoin On The Rise, USD/CAD Under Pressure
By NAGA (Michalis Efthymiou)   |  Aug 12, 2022 10:08AM ET
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The US Dollar is on the rise again as we approach the opening of the US trading session. This is potentially due to lower inflation starting to wear off and the Federal Reserve members refraining from a dovish tone.

The speeches of various Fed members over the past 24 hours have confirmed that inflation remains high and that we do not yet have an indication if inflation will continue to decline. This is, of course, especially true as many assets, such as the energy market,  continue to see high levels of volatility, and the employment sector continues to see higher wage growth.

Other market areas are also showing signs of volatility and reacting to the US Dollar. The stock market futures indicate that demand for stocks continues to remain steady, with all three major US indices up today.

Simultaneously, the price of oil is declining. Oil prices have broken out of today's price range and have declined by 1.92%. The stock market may continue to see high demand if crude oil can maintain a price below $85-$90. This would result in further pressure on inflation and monetary policy, which are correlated with stocks.

USD/CAD - Technical View

The Canadian Dollar has been strengthening its position this week. This is mainly due to the US Dollar coming under pressure after July inflation figures and the oil price soaring since it has been correlated to the USD for several years. However, over the past few hours, the price seems to indicate that the Dollar will not go down without a fight.

The US Dollar Index has increased - a phenomenon which can also be seen in the USD/CAD. In addition, the price of oil has also slightly declined to put further pressure on the Canadian Dollar. Traders are waiting to see if the price will be able to break higher than yesterday’s retracement, which may also entice further trend traders.

USD/CAD 30-minute price chart.
USD/CAD 30-minute price chart.

The US CPI figures led many investors to believe that major interest rate hikes of 0.75% and 1% will not be actioned again in the coming months. The Federal Reserve will surely not give up on tightening the monetary policy further just yet because inflation rates remain unsatisfactory.

However, the regulator may slow down the pace of the interest rate increases. For example, the regulator may increase the rate by only 50 basis points or even suspend alterations for a while to assess the impact on the economy.

Investors will also plan their trades for next week, where the asset is likely strongly influenced by the Fed’s Meeting Minutes and the Consumer Price Index for the Canadian economy.

Many investors have questioned why oil prices have increased over the past two days. They rose mainly due to robust July data on Chinese exports, which reflected an increase of 18%, and the forecast of the International Energy Agency (IEA) for an increase in energy demand for the current year by 380 thousand barrels per day.

Bitcoin - Technical View

This week Bitcoin looks like it's on track to end the week slightly higher. The price of the asset is slightly lower, with a decline measuring 0.75% today, but the weekly performance looks set to be above 2.25% unless a strong decline is witnessed in the coming hours. The total market capitalization increased to $1.134 trillion, and Bitcoin's market share was just above 40%.

Bitcoin price chart.
Bitcoin price chart.

The asset reacted similarly to the stock market, seeing an increase in demand due to the latest inflation figures and a potential alteration to the monetary policy. However, the levels of volatility remain low compared to previous weeks and months.

This may also be due to uncertainty specifically linked to the industry over the past two months after several firms have closed their doors and had issues with delays in withdrawals. On the other hand, market capitalization has increased, which may signal that investors are again returning to the market.

U.S. Dollar And Bitcoin On The Rise, USD/CAD Under Pressure
 

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U.S. Dollar And Bitcoin On The Rise, USD/CAD Under Pressure

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