September 11th 2023, 2:54:59 pm

(about 14 days ago)

Forces can not halt the US dollar and stocks, while Canada lagging

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US equities fell this week dragged by giant tech sector leader, Apple Inc, as China moved to intensify the ban on iPhone usage by certain Chinese officials. The indices edged up on Friday. S&P 500 and Nasdaq lost 1.08% and 1.72% and Canada’s S&P/TSX composite declined 0.95% this week.
The technology sector has been the winner in 2023 and no shock has been able to take down its sector leadership. One force to consider is China as a substantial portion of the revenue of giants like Apple and Microsoft is coming from the motherland.
The resilience of the US economy compared to other developed nations is making the US recession less likely, shrugging off the higher interest rates. The latest labor data and GDP of the US are bolstering the investors' confidence that higher rates are not driving the US economy into recession and the US central bank is not likely to increase rates much higher.
The expectation is for the US Fed to increase interest rates by a maximum of 0.25% to 5.75%. The high rates, strong capital market, and better economic prospects have also helped the US dollar to remain unequivocally strong, pushing down any other major currency.
The US dollar has been gaining for the past eight weeks and now is in the overbought territory, but every time markets were betting on the weakening of the greenback, it proved them wrong.
In contrast, Canada is seeing weaker economic data points, including a shrinking economy, weaker job market, higher inflation, and lower rates which is putting pressure on its dollar against USD. The US dollar is currently trading at 1.36 CAD which is the highest level in the past two months.