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Market players continue to assess the prospects for the US dollar and the stock market. On the one hand, risk appetite is likely to rise amid the Fed's soft policy and expectations of a quicker economic recovery in the US. On the other hand, the acceleration of inflation and the growth of the public debt worsen market sentiment. Apparently, traders pay more attention to those factors that fuel demand for riskier assets. For this reason, the US dollar is currently trading with a bearish bias. Yesterday, at the beginning of the US session, bears pushed the US dollar to the level of 92.10. Despite the downward trend of the greenback, some major world currencies continue to fall against the US dollar.
The USD/CAD pair quickly recovered after a dip below the 1.2600 level. Importantly, the pair has been rising for three consecutive sessions. It has once again approached weekly highs but it lacks momentum for further growth. Perhaps this is due to the downward dynamics of the US dollar across the board, which deters the bulls from more aggressive actions.
The pair's rally may be fostered by the decline in the energy market. The Loonie, as a commodity currency, is vulnerable to negative changes in oil prices. Currently, oil is unlikely to grow.
Meanwhile, USD/CAD may consolidate above 1.2630. This is the upper limit of the 4-month descending channel. From this level, the pair may reverse upwards. On Thursday, the pair went below the level of 1.2600. However, any downward movement is likely to be limited by the 1.2600-1.2590 range. It may attract bulls back. In case of a break below the 1.2570 level, the USD/CAD pair may test the psychologically important level of 1.2500.
A steady growth above 1.2600 will help the USD/CAD pair to return to 1.2700 for the first time since March 8. The next important resistance level is located near the 1.2750 area.
On Thursday, Canada did not unveil any significant economic reports. On Friday, Canada is going to publish Canada's Labour Force Survey. Invests who have CAD in their portfolios are sure to await this report with bated breath.
If the report turns out to be better than the forecast and the previous value, the Canadian dollar will gain momentum, even against the US dollar. If the figure is worse than expected, the Loonie will decrease significantly. The USD/CAD pair will also add gains if the report is upbeat.
Canada's unemployment rate is expected to be 8% in March compared to February's 8.2%. Employment is projected to increase by 100,000.
US initial jobless claims rose to 744,000 in the week ended April 3 compared to 728,000 and 658,000 in the previous two weeks.
On Thursday, the US published weekly data on the labor market. Contrary to forecasts, the unemployment level increased, which dims hopes for a rapid recovery of the sector. Yet, this news cannot be called negative for the US dollar, but traders are sure to reassess their outlook on the greenback and the US economy.
The pound sterling also reacts to the declining US dollar. However, its dynamics is largely determined by the news on the AstraZeneca vaccine. Traders are selling the pound sterling after the negative news on the coronavirus vaccine produced by AstraZeneca, which is used in the UK. High-ranking pharmaceutical representatives from Europe have confirmed the link between vaccination with AstraZeneca and thrombosis. Among 32 million vaccinated Englishmen, thrombosis was detected in 30 people. Representatives of the UK regulator believe that the existing risk exceeds the benefits of vaccination.
Currently, two vaccines - American and Russian- are used without any serious side effects. The drug from Pfizer in the UK is not yet possible to deliver due to production difficulties. The UK is unlikely to buy Satellite–V for political reasons. It seems that there is only one way out, which is to improve the AstraZeneca vaccine.
The day before, the GBP/USD pair broke through the support level of 1.3790, consolidating below it. The bearish bias for GBP/USD pair is strong, analysts at Credit Suisse said. Thus, it is highly likely to fall to the support level of 1.3706 and further to 1.3640
However, the breakout and consolidation of the pair above the area of 1.3780-90 will spook bears and the pair may advance.
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