「KOL Analysis•Fanny Arianti Arief」Loonie fell from dollar due to profit taking by FOMC

The Canadian dollar (loonie) fell from the dollar yesterday due to profit taking taken by the FOMC today. Loonies declined 0.2% in the range 1.3404 and ranked in the range 1.3359-1.3487. Even so, the loonie, which rose to a three-month high at 1.3352 last Monday, has proven 9% since March. The correction in oil prices also took profit taking over the loonie. Oil prices, which are the mainstay of Canadian commodity exports, have strengthened thanks to a commitment to cut output from oil producers. Meanwhile, Canada's 10-year tenor yield fell 3 basis points to 0.648%. On Friday, the yield on the April level was 0.768%.

The dollar index fell 0.32% to 96.30 yesterday. However, analysts see that the weakening of the dollar will not last long. Bank of America expects the dollar to strengthen in the coming months due to safe haven demand. According to him, the economy of developed countries will not recover before 2022 without the vaccine and the risk of spreading the second wave of Covid-19 which is still looming.

The price of gold went up in two approved sessions - followed by a correction to the stock market and projections from the World Bank regarding the bleak global economy this year. The World Bank estimates that this year's global economy will contract more severely than World War 2 and the production of developed countries will shrink for the first time in six years due to the Covid-19 pandemic. Gold also still has support from the FOMC meeting, which is expected to maintain an accommodative policy.

Oil prices recovered after they were repaired on Tuesday. Yesterday's oil rebound was supported by optimism about the recent commitment of oil producers to cut production. Last Saturday, OPEC + agreed to extend production cuts by 9.7 million bpd by the end of July. However, Saudi Arabia, Kuwait and the United Arab Emirates said that they would not voluntarily defend what was previously done in May and June. Meanwhile, the Energy Information Administration (EIA) raised its WTI oil price target to $ 35.14, up nearly 17% from May's forecast. EIA also estimates that Brent oil prices forecast an average of $ 38.02 this year, up 11.4% from the previous increase. While Goldman Sachs revised the increase in oil prices this year. For the type of Brent rose to $ 40.40 per barrel and WTI to $ 36 per barrel. The price of Brent oil closed up 0.9% to $ 41.18 a barrel and WTI rose 2% to $ 38.94.

Asian stocks declined today after the Wall Street rally faltered, although the Nasdaq remained published in two approved sessions. Market participants are still waiting for this week's FOMC meeting. There is no change in the Fed's policies later, but the Fed will issue economic projections for the first time since December 2019. The Nikkei index fell 0.8% and the Kospi declined 0.3%.

Today's Focus: US FOMC Meeting & CPI

The main focus of the market today is the FOMC meeting which will take place early Thursday. The Fed expects to maintain its policies. However, what concerns the market is the Fed's comments regarding the direction of the policy, specifically after seeing employment data last week. But before the FOMC, the market will first be treated to US CPI data, which is estimated to be at 0%.

[About The Author]

Fanny has started her self-learning of Forex since 2005 and has joined an Indonesian broker as a financial consultant in 2009. Through “trial and error”, she has learnt a lot from failure experiences. She is now a renowned trainers for the forex beginners and has helped the clients to get the profits from trade.

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