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Canadian dollar steadies after slide

The Canadian dollar is drifting in the Wednesday session. Currently, USD/CAD is trading at 1.2680, down 0.08% on the day. It has been a rough week for…

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This article was originally published by Market Pulse

The Canadian dollar is drifting in the Wednesday session. Currently, USD/CAD is trading at 1.2680, down 0.08% on the day.

It has been a rough week for the Canadian dollar, as USD/CAD has gained 1.2% and briefly pushed across the 1.27 line on Wednesday, after the Bank of Canada policy meeting.

BOC maintains rates

Caution is the buzzword in the financial markets, and the Bank of Canada joined the fray at its policy meeting. Earlier in the year, the Bank was quite aggressive, tapering its weekly bond purchases from CAD 5 billion to CAD 2 billion. The Bank had forecast that it would raise interest rates in the second half of 2022, when inflation was expected to rise to the 2% level. However, the BoC is now treading with caution, and maintained monetary policy at the meeting on Wednesday. The bank kept interest rates at 0.25% and bond purchases at CAD 2 billion. The message to the markets was dovish, with policy makers warning that a fourth wave of Covid-19 and continuing supply-chain issues could hurt the recovery. Still, the Bank said that it expected the economy to improve in the second half of 2021.

In addition to Covid concerns, the BoC stayed away from away monetary moves for two reasons. First, the economy contracted by 0.3% in the second quarter, the first quarterly decline since the summer of 2020. As well, Canada is holding a federal election on September 20, and the BoC wished to observe strict impartiality and not make any changes to monetary policy just prior to the election. The BoC noted that inflation remains above 3%, but said that it believes that the rise is transitory and it expects inflation to ease.

The BoC’s cautious stance was not helpful for the Canadian dollar, as USD/CAD rose on Wednesday as high as 1.2762, hitting a two-week high.

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 USD/CAD Technical

  • USD/CAD is testing resistance at 1.2719. Above, there is resistance at 1.2785
  • There is support at 1.2465 and 1.2399

For a look at all of today’s economic events, check out our economic calendar. www.marketpulse.com/economic-events/

Economics

US stocks retreat after mixed economic data

Benchmark US indices drifted lower on Thursday September 16 after mixed economic data showed that retails sales rose in August but unemployment benefits…

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Benchmark US indices drifted lower on Thursday, September 16, after mixed economic data showed that retails sales rose in August, but unemployment benefits claims also increased last week.

The S&P 500 fell 0.16% to 4,473.75. The Dow Jones shed 0.18% to 34,751.32. The NASDAQ Composite rose 0.13% to 15,181.92, and the small-cap Russell 2000 was down 0.07% to 2,232.91.

Retail sales rose by 0.7% to US$618.7 billion in August after declining 1.8% to US$613.3 billion in the previous month, the Census Bureau reported. Retail sales increased by 15.1% YoY in the month. The data indicated the economic recovery is on track despite Delta virus concerns.

The unemployment benefits claims rose by 20,000 to 332,000 in the week ended Sep 11 after rising 2,000 to 312,000 in the previous week, the Labor Department data revealed. The spike in benefits claims suggested the labor market could still be under stress. Investors also took cues from the Chinese markets, where stocks sharply retreated amid fears of economic slowdown.

Real estate and consumer discretionary stocks were the biggest gainers on the S&P 500 on Thursday. Nine of the 11 index segments stayed in the red. Materials and energy stocks were the bottom movers.

Stocks of DoorDash, Inc. (DASH) rose 5.84% after analysts upgraded the stock to a buy rating. Beyond Meat, Inc. (BYND) stock fell 4.21% in intraday trading after investment banking company Piper Sandler downgraded the stock to an underweight rating.

Also, shares of mobile application developer Asana Inc rose by 8.84% after analysts gave a buy rating to the stock. The company bagged the 9th spot in the Best Workplaces for Women list issued by Great Place to Work and Fortune. It is among the top 10 companies for the second consecutive year.

Lucid Group, Inc. (LCID) stock gained 6.60% after analysts provided a bullish outlook for the stock. In addition, the company said it received the longest-range rating from the US Environmental Protection Agency (EPA) for its Air Dream Edition luxury sedan's 520-mile coverage.

In the consumer discretionary sector, Target Corporation (TGT) rose 1.16%, Dollar General Corporation (DG) gained 2.11%, and The Kraft Heinz Company (KHC) rose 1.26%. Sysco Corporation (SYY) and Archer-Daniels-Midland Company (ADM) advanced 1.00% and 1.01%, respectively.

In material stocks, BHP Group (BHP) declined by 3.86%, Rio Tinto Group (RIO) fell by 4.57%, and Vale S.A. (VALE) fell by 4.91%. Freeport-McMoRan Inc. (FCX) and Southern Copper Corp (SCCO) ticked down 6.38% and 4.67%, respectively.

In energy stocks, Royal Dutch Shell plc (RDS-A) declined 1.21%, PetroChina Company Limited (PTR) declined by 1.37%, and BP plc (BP) fell 1.34%. China Petroleum & Chemical Corporation and Equinor ASA (EQNR) declined 1.34% and 2.19%, respectively.

Also Read: IronNet (IRNT), Sphere 3D (ANY) stocks draw huge attention Thursday

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Also Read: SBUX, BYND & APRN: Three trending food, restaurant stocks Thursday

Top Gainers

Top performers on S&P 500 included ETSY Inc (3.10%), American Airlines Group Inc (2.63%), Align Technology Inc (2.53%), Dexcom Inc (2.44%). On NASDAQ, top performers were Aeye Inc (36.53%), Elite Education Group International Ltd (33.33%), Leap Therapeutics Inc (31.09%), Tuesday Morning Corp (28.32%). On Dow Jones, Salesforce.Com Inc (1.64%), Mcdonald's Corp (0.93%), Home Depot Inc (0.91%), American Express Co (0.80%) were the leaders.

Top Losers

Top laggards on S&P 500 included Freeport-McMoRan Inc (-6.64%), Newmont Corporation (-3.95%), L3harris Technologies Inc (-3.35%), Aptiv PLC (-3.30%). On NASDAQ, Vera Therapeutics Inc (-26.54%), MacroGenics Inc (-23.76%), Silverback Therapeutics Inc (-23.08%), Aerie Pharmaceuticals Inc (-21.40%). On Dow Jones, Goldman Sachs Group Inc (-1.31%), Dow Inc (-1.21%), Merck & Co Inc (-1.15%), Caterpillar Inc (-1.04%) were the laggards.

Volume Movers

Top volume movers were Apple Inc (15.32M), Bank of America Corp (13.83M), Ford Motor Co (12.29M), AT&T Inc (8.41M), Lucid Group Inc (13.42M), Leap Therapeutics Inc (13.39M), Vinco Ventures Inc (12.36M), SoFi Technologies Inc (10.40M), Farmmi Inc (9.55M), ContextLogic Inc (8.79M).

Also Read: Top betting stocks to watch amid NFL craze, Macau casino review

Futures & Commodities

Gold futures were down 2.35% to US$1,752.55 per ounce. Silver decreased by 3.86% to US$22.883 per ounce, while copper fell 2.90% to US$4.2787.

Brent oil futures increased by 0.24% to US$75.64 per barrel and WTI crude was down 0.04% to US$72.58.

Bond Market

The 30-year Treasury bond yields was up 0.66% to 1.881, while the 10-year bond yields rose 2.46% to 1.336.

US Dollar Futures Index increased by 0.34% to US$92.847.

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Economics

Top Shipper Warns Commodity Freight Rates About “To Go Parabolic”

Top Shipper Warns Commodity Freight Rates About "To Go Parabolic"

Similar to container rates, dry bulk shipping rates are poised to move…

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Top Shipper Warns Commodity Freight Rates About "To Go Parabolic"

Similar to container rates, dry bulk shipping rates are poised to move higher on limited vessel capacity and robust demand, according to Genco Shipping President and CEO John Wobensmith, who spoke with Bloomberg

"I think rates can go higher from here," Wobensmith said. "You do get to a point, and you've seen this in containers, where you hit a certain utilization rate, and you start to go parabolic on rates. I think we're getting close to that period."

He said, "fundamentally, you've got demand outstripping supply growth," adding that freight agreements are above $20,000 for 1Q, a level not seen seasonally in a decade. 

More than 5 billion tons of commodities, such as coal, steel, and grain, are shipped worldwide in bulk carriers in a given year. A move higher in the Baltic Dry Index (BDI) indicates increasing commodity demand on top shipping lanes. 

Lending credit to Wobensmith's argument is BDI on a seasonal basis that shows demand is currently outpacing vessel supply and pressuring rates higher. 

He doesn't expect bulk carrier rates to experience a significant reversal until early next year as demand troughs seasonally. "You need very little demand growth to just continue to build off what we've seen this year," he said. "It's more about higher highs and higher lows than anything else."

China's credit impulse needs to turn higher for the commodity boom and bulk carrier rates to stay elevated. 

Besides China, passage of a US infrastructure bill could be the fiscal injection that could also spark higher commodity prices, thus continue driving bulk carrier rates higher. 

All of this is feeding into inflation that the Federal Reserve convinces everyone it's only "transitory." 

 

 

Tyler Durden Thu, 09/16/2021 - 16:50
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Economics

Ethereum 2.0 Has What It Takes to Knock Bitcoin off Its Perch

Ethereum (CCC:ETH-USD), the world’s second-largest cryptocurrency, is more than just an internet token. It is the top smart contract and decentralized…

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Ethereum (CCC:ETH-USD), the world’s second-largest cryptocurrency, is more than just an internet token. It is the top smart contract and decentralized application network, with more use cases than other digital assets.

Source: shutterstock

As it moves to a proof-of-stake model, the network’s capacity will increase substantially and significantly reduce its energy requirements. Therefore, ETH-USD represents the cream of the crop as far as crypto investing is concerned.

The ETH token has shot up more than 380% in value since the beginning of the year. At the same time, industry stalwart Bitcoin (CCC:BTC-USD) is only up about 60% in the same period.

The Ethereum platform is undergoing major changes to increase its scalability, transaction throughput and efficiency while reducing its gas fees. The platform has already shown significantly more real-world utility than its peers, and future upgrades will create more divergence between them.

The London and Shanghai Hard Fork

The whole crypto sector has been buzzing since the release of Ethereum’s London hard fork. This is a major step towards Ethereum 2.0 and introduced some critical changes to the network.

Most notably, it updated the fee structure to an algorithmically determined model. It involves a base fee, which is usually 25% to 75% transaction value, and a priority fee that incentivizes miners to put a particular user’s transaction first.

In contrast to the first-price auction model the platform ran on previously, the new model was said to significantly boost efficiency. However, the base fee is burned after each transaction is complete, making ETH a deflationary asset. The currency’s supply is likely to reduce overtime, pushing its price higher.

The Shanghai hard fork is the next and perhaps final upgrade that will wrap up the Ethereum 2.0 update. It will go live anytime between the end of this year and early to mid-2022. The update is likely to merge Ethereum’s mainnet and Beacon Chain to implement proof-of-stake protocol.

Ethereum Has an Abundance of Use Cases

Bitcoin, the undisputed leader in the crypto space, is more of a safe haven asset for investors against fiat currencies. However, Ethereum is an ecosystem that is powering the digital economy.

Aside from the typical staking involved with most cryptos, it is the foundation for decentralized finance (DeFi) protocols. These are based on smart contracts, which execute when a predetermined criterion is met. Crypto investors have at least 7.7 million ETH tokens in DeFi protocols at this time.

Moreover, Ethereum is a dominant force in the nonfungible tokens, or NFT, space. NFTs are unique tokens that can represent avatars, art, music and other related items.

The NFT market has been booming this year, and Ethereum has been powering those transactions. Virtually every NFT exchange uses ETH to conduct these transactions on their respective platforms.

Ethereum is also a base layer for stable coins such as Tether (CCC:USDT-USD), pegged to the US dollar. More than 50% of transactions in Tether are based on Ethereum.

2.0 Can Help Ethereum Outpace Bitcoin

Ethereum has been on quite a roll in the past year. Since the pandemic began, major institutional investors have loaded up on the crypto, which propelled its price up more than 2,700% since January 2020.

With Ethereum 2.0 around the corner, its value is expected to rise even further. The platform will become more robust than ever before, offering even more utility for its user base. Hence, ETH-USD is perhaps the hottest crypto to invest in these days.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University. 

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