The US Dollar (USD) is flat to slightly softer on the session but retains a weak undertone overall, Scotiabank’s Chief FX Strategist Shaun Osborne notes.
USD remains soft but holds range
“FX movement is mostly limited as markets mark time ahead of today’s data releases and the FOMC on Wednesday. European stocks and US equity futures are firmer, with tech leading moderate gains, while bonds are slightly firmer. US Retail Sales data this morning are expected to decline 0.2% in April, weighed down by soft auto sales (ex-autos data is expected to be up 0.2%). August Industrial Production is forecast to rise 0.2% after July’s drop but sluggish PMI/ISM data suggest some risk of soft data.”
“Business Inventories and the NAHB Housing market Index are out at 10ET but are unlikely to be market moving. Soft Retail and IP data may weigh on the USD tone as markets continue to mull the likely scale of Fed easing. Swaps are pricing in 38bps of easing risk for Wednesday, leaning slightly in favour of a more aggressive cut but still somewhat equivocal pricing means that the outcome Wednesday will disappoint some sections of the market and will likely boost volatility in the short run at least.”
“The DXY retains a weak undertone on the charts, with the index pinned back against the recent range lows at 100.50/60. Technical trends and underlying momentum indicators are tilted bearish, suggesting more losses ahead for the index. DXY spread-based fair value is estimated at 99.6 this morning.”

The US Dollar turns flat at the start of the US trading session.

Limited reaction as expected on the Retail Sales data.
The US Dollar Index moves away from this year's low, though a very marginal bounce.
The US Dollar (USD) trades flat on Tuesday, after spending most of the day in red digits with selling pressure at hand. The Federal Open Market Committee (FOMC) convenes on Tuesday to debate the upcoming US Federal Reserve’s (Fed) policy decision on Wednesday and how big the initial Fed’s interest rate cut will be. Then, the markets will finally hear from Fed Chairman Jerome Powell at the press conference.

On the economic data front, the Retail Sales did not really move the needle as such. It was expected that there would not be a substantial move with most traders keeping their powder dry for the Fed meeting on Wednesday. The Retail Sales came in, mostly in line of expectations and even the revisions were really marginal.

Daily digest market movers: Sidelined until Wednesday
Retail Sales data for August did not really shake markets. Monthly Retail Sales grew by 0.1%, after growing by 1.0% in July which was revised to 1.1%. Sales excluding Cars and Transportation grew by a little 0.1%, from 0.4% the prior month.
At 13:15 GMT, Industrial Production data for August saw a surprise uptick to 0.8%, coming from the contraction by 0.6% in July.
At 14:00 GMT, Federal Reserve Bank of Dallas President Lorie Logan delivered pre-recorded welcoming remarks at the Eleventh District Banking Conference in Dallas. Logan isn't expected to talk about monetary policy because the Fed is within its blackout period ahead of its meeting on Wednesday.
The National Association of Home Builders (NAHB) has released September’s Housing Market Index, with a steady 41 against the previous reading of 39.
European and US equities are sprinting higher at the New York opening bell, with all major indices up over 0.50%.
The CME Fedwatch Tool shows a further declining chance of a 25 basis points (bps) interest rate cut by the Fed on Wednesday, by only 33.0%, further down from the 66% seen a week ago. Meanwhile, markets have increased the chances of a 50 bps cut to 67.0%. For the November 7 meeting, another 25 bps cut (if September is a 25 bps cut) is expected by 18.0%, while there is a 52.3% chance that rates will be 75 bps (25 bps + 50 bps) and a 29.7% probability of rates being 100 (25 bps + 75 bps) basis points lower compared to current levels.
The US 10-year benchmark rate trades at 3.64%, bouncing off the 15-month low for now.
US Dollar Index Technical Analysis: Rangebound until the final moment
The US Dollar Index (DXY) respects the boundaries in which it has been trading during the last month, nearly the yearly lows. A very small bounce is noticeable on the chart, though it is not really running away from that lower band. The risk is that the DXY could snap below it when the Fed delivers its rate cut.

The upper level of the recent range is 101.90. Further up, a steep 1.2% uprising would be needed to get the index to 103.18, with the 55-day Simple Moving Average (SMA) at 102.89 on the way. The next tranche up is very misty, with the 200-day SMA at 103.81 and the 100-day SMA at 103.88, just ahead of the big 104.00 round level.

On the downside, 100.62 (the low from December 28, 2023) holds strong and has already made the DXY rebound two times in recent weeks. Should it break, the low from July 14, 2023, at 99.58, will be the next level to look out for. If that level gives way, early levels from 2023 are coming in near 97.73.

US Dollar Index: Daily Chart

US Dollar Index: Daily Chart

Interest rates FAQs
What are interest rates?
Interest rates are charged by financial institutions on loans to borrowers and are paid as interest to savers and depositors. They are influenced by base lending rates, which are set by central banks in response to changes in the economy. Central banks normally have a mandate to ensure price stability, which in most cases means targeting a core inflation rate of around 2%. If inflation falls below target the central bank may cut base lending rates, with a view to stimulating lending and boosting the economy. If inflation rises substantially above 2% it normally results in the central bank raising base lending rates in an attempt to lower inflation.

How do interest rates impact currencies?

How do interest rates influence the price of Gold?

What is the Fed Funds rate?

Bitcoin approaches the key daily support level of $56,000, eyeing for a recovery.Microstrategy announces $700M private offering for debt buyback and Bitcoin acquisition.CME Group data projects a higher 69% chance of a 50 bps rate cut by the US Federal Reserve on Wednesday.
 
Bitcoin (BTC) shows signs of recovery and rises above $59,000 at the time of writing on Tuesday, following a three-day decline after failing to close above $60,500 over the weekend. This positive momentum could be bolstered by an anticipated 50 basis points (bps) US interest rate cut by the US Federal Reserve (Fed) on Wednesday, according to CME Group data. At the same time, the announcement of Microstratergy’s plan to purchase more BTC indicated further potential for Bicoin’s recovery in the coming days.
 
Daily digest market movers: 69% chance of 50 bps rate cut
The upcoming Fed decision on Wednesday will likely cause a volatile price action for Bitcoin and global currencies. According to CME Group data, there is a 69% chance that the Fed will cut interest rates by 50 bps on Wednesday for the first time in over four years. This big rate cut could be a bullish sign for cryptocurrencies, stocks, and global markets as lower borrowing costs generally provide more purchasing power for investors, and they would invest their money into assets rather than keeping it in banks. 
“The Federal Reserve is widely anticipated to cut the interest rate at its September on Wednesday, the first time in four years. Investors will also take more cues from interest rate projections, known as the ‘dot plot’. The expectation of aggressive rate cuts might continue to undermine the Greenback in the near term”, said  Lallalit Srijandorn, an analyst at FXStreet.

Rate cut probability chart
On Monday, US-based Microstrategy (MSTR), the publicly traded business intelligence company, unveiled plans for a private offering of $700 million in convertible senior notes. The firm plans to raise capital to pay off debt and purchase more Bitcoin.
“MicroStrategy has acquired 18,300 BTC for ~$1.11 billion at ~$60,408 per #bitcoin and has achieved BTC Yield of 4.4% QTD and 17.0% YTD. As of 9/12/2024, we hodl 244,800 $BTC acquired for ~$9.45 billion at ~$38,585 per bitcoin,” said Microstrategy’s CEO Michael Saylor in his Twitter post.
Now valued at $14.15 billion, the company’s Bitcoin portfolio has seen a 50% gain, driven by combining strategic fixed-interval purchasing and Bitcoin’s price growth.
Microstrategy’s focus on balancing debt reduction with Bitcoin accumulation continues to be central to its broader financial goals. Unlike exchange-traded funds (ETFs) like Blackrock’s IBIT and Grayscale’s GBTC, Microstrategy holds the most Bitcoin of any publicly traded company worldwide.
MicroStrategy Announces Proposed Private Offering of $700M of Convertible Senior Notes $MSTR https://t.co/OCq7wj2u0P— Michael Saylor⚡️ (@saylor) September 16, 2024
 
US Bitcoin Spot Exchange Traded Funds (ETF) data recorded a mild inflow of $12.80 million on Monday, following a $403.30 million net inflows last week. Still, this inflow is small compared to the total Bitcoin reserves held by the 11 US spot Bitcoin ETFs, which total $49.44 billion in Assets Under Management (AUM).

Bitcoin Spot ETF Net Inflow chart

Bitcoin ETF AUM chart
However, Coinglass’s data provides a mild bearish outlook for Bitcoin. Bitcoin’s long-to-short ratio is at 0.99, indicating that more traders anticipate the asset price to fall. In any case, the ratio is very close to one, and a flip above one would indicate that traders’ sentiment would shift from bearish to bullish.

Bitcoin long-to-short ratio chart
Technical analysis: BTC eyes for a recovery
Bitcoin price retested and failed to close above the descending trendline (drawn from multiple high levels from the end of July) and the 100-day Exponential Moving Average (EMA) at $60,705 on Friday. It declined 3.78% in the next three days. At the time of writing on Tuesday, it trades just above $59,000.
If BTC continues to retrace, it could find support around the daily level of $56,022. If this support holds, BTC’s price could again attempt to break above the 100-day Exponential Moving Average (EMA) at $60,685 and the descending trendline.
The Relative Strength Index (RSI) and the Awesome Oscillator (AO) on the daily chart hover around their neutral levels of 50 and zero, indicating that neither the bulls nor the bears control the momentum. For the aforementioned bullish move to be sustained, both indicators must trade above their neutral levels.

BTC/USDT daily chart
However, If BTC closes below the $56,022 daily support level, the bullish thesis will be invalidated. In this case, it could decline 3.6% to retest its psychologically important level at $54,000.
Cryptocurrency metrics FAQs
What is circulating supply?
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
What is market capitalization?

What is trading volume?

What is funding rate?

The market is pricing in a 67% chance of a 50 bps cut.Rate cuts have historically benefited Bitcoin’s price. Could a 50 bps revive recession fears? A favourable reaction could see Bitcoin bulls test the 60k-61k zone. 
The Federal Reserve's two-day monetary policy meeting kicks off today and will conclude on Wednesday. The US central bank is set to start cutting rates, but the big question is by how much and what might this mean for Bitcoin. 
The market has ramped up expectations that the Fed will kick off this rate-cutting cycle with an outsized reduction. According to the Fed funds, the market is fully pricing in a rate cut and is pricing in a 67% probability of a 50 basis point rate cut, up significantly from 35% just a week ago.  
There are arguments for and against a 25- or 50-basis-point rate cut. While inflation has cooled, the hotter-than-expected monthly core inflation print has served as a reminder that inflation remains sticky, favouring a 25-basis-point cut. Meanwhile, the cooling labour market and signs that the economy is slowing faster than expected support a larger move by the Fed. 
Given the uncertainty in the pricing ahead of the decision, whether the Fed decides to cut by 25 or 50 basis points, the market will likely see increased volatility.  
How has Bitcoin reacted to rate cuts previously? 
Historically speaking, Bitcoin has performed well following Fed rate cuts. In March 2020, Bitcoin rallied following the Fed’s rate reductions in response to the pandemic economic shock. 
When the Federal Reserve cuts interest rates, this increases liquidity, which is often beneficial for risk assets such as Bitcoin or stocks. Therefore, the start of a rate-cutting cycle is often considered bullish for crypto. 
However, there is a possibility that a 50-basis-point rate cut from the Fed may spook the market. Concerns over a hard landing surfaced following the weaker-than-expected July non-farm payroll report, sending Bitcoin below 50k. Should the Fed opt for an outsized hike, it risks sending the message that the Fed is behind the curve and that a 50-basis-point hike is needed to attempt to avoid a hard landing. Such a move could revive lingering recession fears, negatively impacting risk assets and the Bitcoin price. 
This isn’t our base case scenario, given that the Bitcoin price has recovered from the September low of 52.5k in line with rising expectations of a 50 basis point cut. With this in mind, an outsized cut, if accompanied by calming words from the Fed, could support a move higher for the digital asset. 
Where next for Bitcoin? 
On the 4-hour chart, Bitcoin trades in a symmetrical triangle. A favourable reaction to the Fed’s rate decision could see buyers break out above the 60-61k zone to fuel a move higher toward 65k. 
Should the Fed’s move fuel recession worries, a fall lower towards 53.7, the rising trendline support, could be on the cards. 

The Canadian Consumer Price Index is expected to lose further traction in August.The Bank of Canada has reduced its policy rate by 75 bps so far this year.The Canadian Dollar seems to have embarked on a consolidative phase.
Canada is set to release the latest inflation data on Tuesday, with Statistics Canada publishing the Consumer Price Index (CPI) figures for July. Projections indicate a continuation of disinflationary trends in both the headline and the core CPI.
In addition to the headline CPI data, the Bank of Canada (BoC) will release its core CPI, which excludes volatile items such as food and energy. In July, the BoC's core CPI showed a 0.3% gain from July and a 1.7% increase over the past year. Meanwhile, the headline CPI rose by 2.5% over the last 12 months, the lowest level in the last 40 months and 0.4% from a month earlier.
These figures are being closely watched, as they could affect the Canadian Dollar (CAD) in the near term via the Bank of Canada's monetary policy, particularly following the central bank's additional 25-basis-point cut to its policy rate earlier in the month, bringing it to 4.25%.
In the FX market, the Canadian Dollar remains sidelined below 1.3600, a region also coincident with the key 200-day SMA. The ongoing rangebound theme follows monthly peaks in the 1.3625-1.3620 band recorded on September 11.
What can we expect from Canada’s inflation rate?
Analysts expect price pressure in Canada to continue their downward trend in August, although they are still likely to remain above the Bank of Canada's target. However, the persistence of disinflationary pressure should lead the BoC to maintain its easing cycle unchanged at its upcoming meetings. It is worth recalling that the central bank has already lowered its interest rate by 75 bps since it started its easing cycle earlier in the year.

Following the BoC’s rate cut on September 4, Governor Tiff Macklem noted that a 25 bps rate cut was appropriate, although a larger rate cut could be considered in case the economy was weaker than expected.
Regarding inflation, BoC Governor Tiff Macklem argued in a speech to the Canada-UK Chamber of Commerce in London on September 10 that global trade disruptions could make it more challenging for the central bank to consistently achieve its 2% inflation target. He explained that the BoC would need to balance the risks of controlling rising prices while supporting economic growth. 
Macklem noted that with globalization slowing down, the cost of global goods might not decrease as much as before, potentially leading to increased upward pressure on inflation. He mentioned that "trade disruptions may also increase the variability of inflation," pointing out the impact that supply shocks can have on prices. He added that such disruptions could result in "larger deviations of inflation from the 2% target." Consequently, he said the Bank of Canada is focussing on risk management to balance inflation and economic growth and is investing in efforts to better understand global supply chains.
Analysts at TD Securities noted, “Base effects will contribute to a sharp (0.4pp) deceleration for headline CPI alongside further progress on core measures as softer energy prices and seasonal headwinds hold prices unchanged m/m”.
When is the Canada CPI data due, and how could it affect USD/CAD?
Canada is set to release its July CPI on Tuesday at 12:30 GMT. The Canadian Dollar's reaction will largely depend on how the data impacts expectations for the Bank of Canada's (BoC) monetary policy. Unless the figures contain significant surprises, the BoC is anticipated to maintain its current easing approach.
USD/CAD started the month with a decent upward bias, reaching monthly highs around 1.3620 last week. The monthly advance has so far been on the back of further depreciation of the Canadian currency, which has been losing momentum since the August tops near 1.3440 vs. the US Dollar (USD).
Pablo Piovano, a senior analyst at FXStreet, points out that USD/CAD appears well-supported around the critical 200-day Simple Moving Average (SMA) near 1.3590. A break below this level could trigger further weakness, potentially targeting the next support level at the August bottom of 1.3436 (August 28), just ahead of the March low of 1.3419 (March 8), and the weekly low of 1.3358 (January 31).
On the upside, Pablo notes that immediate resistance is located at the September peak of 1.3622 (September 11). The breakout of this region could expose provisional barriers at the 55-day and 100-day SMAs of 1.3659 and 1.3664, respectively, prior to the 2024 top of 1.3946 (August 5).
Pablo also mentioned that any significant increases in CAD volatility would likely hinge on unexpected CPI results. If inflation data comes in below expectations, it could strengthen the case for another BoC interest rate cut at the next meeting, potentially leading to a rise in USD/CAD. Conversely, if inflation exceeds expectations, the Canadian Dollar might experience only modest gains.
Economic Indicator
Consumer Price Index - Core (MoM)
The core Consumer Price Index, released by Statistics Canada on a monthly basis, represents changes in prices for Canadian consumers by comparing the cost of a fixed basket of goods and services. The core CPI excludes the more-volatile food and energy categories and it is considered a measure of underlying inflation. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is seen as bullish for the Canadian Dollar (CAD), while a low reading is seen as bearish.
Read more.
Last release: Tue Aug 20, 2024 12:30
Frequency: Monthly
Actual: 0.3%
Consensus: -
Previous: 0.1%
Source: Statistics Canada
Canadian Dollar FAQs
What key factors drive the Canadian Dollar?
The key factors driving the Canadian Dollar (CAD) are the level of interest rates set by the Bank of Canada (BoC), the price of Oil, Canada’s largest export, the health of its economy, inflation and the Trade Balance, which is the difference between the value of Canada’s exports versus its imports. Other factors include market sentiment – whether investors are taking on more risky assets (risk-on) or seeking safe-havens (risk-off) – with risk-on being CAD-positive. As its largest trading partner, the health of the US economy is also a key factor influencing the Canadian Dollar.
How do the decisions of the Bank of Canada impact the Canadian Dollar?

How does the price of Oil impact the Canadian Dollar?

How does inflation data impact the value of the Canadian Dollar?

How does economic data influence the value of the Canadian Dollar?

 

Bitcoin Spot ETF inflow hit its highest level in over 50 days with $263 million positive net flow on Friday, September 13. Bitcoin dominance makes news highs almost everyday, climbs past 57% on Saturday. BTC fear and greed index flashes neutral after asset breaks past $60,000 psychological barrier. BTC trades at $60,134 at the time of writing. 
Bitcoin (BTC) Spot ETFs are considered a marker of institutional interest in the asset. Spot ETF inflows ended a negative streak with record net flows to the asset class on Friday, September 13. 
Bitcoin’s dominance relative to other altcoins hit a new high, crossed the 57% level on Saturday. 
These factors could catalyze gains in Bitcoin
The top three market movers for Bitcoin are institutional capital inflow, dominance and supply of the asset on exchanges. These factors determine the demand for the asset, its relevance among market participants, compared to other cryptocurrencies (altcoins) and the selling pressure on BTC, eventually influencing Bitcoin price. 
Data from crypto intelligence tracker Sosovalue shows that Bitcoin Spot ETFs ended the week with record inflows, $263.07 million on Friday. This is the highest capital inflow since July 2024, in nearly 50 days. 
Institutional capital inflow to Bitcoin is key since it represents demand among large wallet investors and higher inflow and demand typically fuel gains in BTC. 

Bitcoin Spot ETF inflows 
The fear and greed index measures the sentiment among Bitcoin traders. The index reads neutral on Saturday, as Bitcoin makes a comeback above the psychological barrier of $60,000. 

Bitcoin fear and greed index
The asset’s supply on exchanges is now at its lowest point since 2018. Declining exchange supply is considered a positive sign for the cryptocurrency since it reduces the available tokens for sale on exchange platforms and reduces selling pressure. 
Bitcoin supply has dropped to 1.86 million, down from 3.21 million in March 2020, per Santiment data. 

Bitcoin supply on exchanges 
The asset’s dominance is the ratio of BTC market capitalization to the rest of the cryptocurrencies, namely altcoins. Dominance has hit a new high every few days, climbs to 57.78% on September 13. 
While this yields negative returns for traders holding altcoins (Bitcoin pairs), it is considered a bullish sign for Bitcoin. 

Bitcoin dominance 
Bitcoin eyes $65,000 target
Bitcoin made a comeback above $60,000, trades at $60,134 at the time of writing. The asset could extend gains by 8% to target the $65,000 level. The Moving Average Convergence Divergence (MACD) indicator flashes green histogram bars above the neutral line, suggesting an underlying positive momentum in BTC price trend. 
BTC could find support in the Fair Value Gap (FVG) between $58,588 and $59,900. 

BTC/USDT daily chart 
A daily candlestick close under $59,900, the upper boundary of the FVG, could invalidate the bullish thesis for Bitcoin. 

The Federal Reserve is expected to cut interest rates this week. The question is whether the bond market has fully priced in the start of policy easing?
It’s tempting to say “yes” after reviewing recent performance data. Year to date, all the primary categories of US fixed-income markets are posting gains, based on a set of ETFs through Friday’s close (Sep. 13).
The leader so far in 2024: junk bonds (JNK) with a solid 7.1% advance.

The investment-grade benchmark for US bonds (BND) is higher by 5.1% in 2024.
The fund has been on a mostly non-stop rally since May, presumably animated by rising confidence that the central bank will announce a rate cut on Wed., Sep. 18.
The rally in junk bonds (JNK) has been even stronger and more consistent for longer. In contrast to the broad investment-grade market (BND), which is currently at a two-year high, JNK’s rally has pushed it into record-high terrain.
A key debate for how bonds fare in the weeks and months ahead is linked to expectations for the US economy.
If the so-called soft-landing prevails – slower but still positive growth – the case for more rate hikes may be muted. By contrast, if the economy is weaker than optimists assume, an extended run of rate cuts to juice growth may be the likely path ahead, in which case bond prices may still have room to run higher.
A key economic report (retail sales) scheduled for tomorrow (Tues., Sep. 17) will be closely read ahead of the Fed’s policy announced the following day. Economists are looking for a monthly decline for spending in August following a sharp rise in July, based on Econoday.com’s consensus point forecast.
“Weak enough retail sales on Tuesday could push the Fed to cut 50 basis points,” says Andrew Hollenhorst, chief economist at Citi.
The Fed funds futures market this morning is pricing in a 59% probability for a 50-basis-points cut vs. a 41% probability for a 25-basis-points cut

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