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Risky assets resist the dollar

November 24, 2021

GBP/USD: The pound edged down slightly against the dollar on Thursday as traders assessed whether recent gains linked to expectations of a central bank rate hike had gone too far. Earlier in the day, sterling had hit a one-week high against the greenback as inflation and encouraging economic data fuelled speculation the Bank of England (BoE) will act first among major global policymakers to raise rates for the first time since the COVID-19 pandemic struck. The pound was also down 0.1% against the dollar at $1.3481. U.K. retail sales data will be released today. The positive data will raise the likelihood of a monetary tightening in December, which could drive a rally in the pound. Immediate resistance is found at 1.3520. A breakout to the upside can trigger growth towards 1.36.

BUY STOP 1.3520/TP 1.36/SL 1.3490


EUR/USD: The euro rebounded on Thursday against the dollar as traders assessed whether the U.S. currency’s recent surge fuelled by differing expectations for interest rate rises had gone too far. Markets had been betting that the European Central Bank would fall behind in tightening policy even as rising inflation prompts others, including the Federal Reserve, to raise rates over the next 12 months. The euro, which had touched a 16-month low below $1.13 on Wednesday, rose 0.2% to $1.1345 on Thursday. Immediate resistance is located at 1.1370. A breakout to the upside can propel the pair towards 1.1450.

BUY STOP 1.1370/TP 1.1450/SL 1.1340


USD/CAD: The Canadian dollar edged higher against the U.S. dollar on Thursday, after earlier touching a six-week low, as investors assessed the greenback’s recent rally amid diverging central bank policy expectations and as oil prices remained under pressure. The loonie slumped on Tuesday after domestic data showed inflation rose at 4.7% in October, in line with market expectations. The price of oil, one of Canada’s major exports, rose slightly after hitting a six-week low following China’s announcement it was moving to tap reserves. The Canadian dollar was up to 1.2605 to the U.S. dollar, having earlier touched its weakest level since Oct. 6, at 1.2627. If market sentiment does not change, the Canadian dollar will face another weak day today. Immediate resistance can be seen at 1.2650. A breakout up can trigger growth towards 1.27.

BUY STOP 1.2650/TP 1.27/SL 1.2630