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March 12, 2021

USDCAD open (6:00 am ET) 1.2550-54,  Overnight Range 1.2526-1.2572,  Close 1.2535

FX Weekly Ranges at a Glance 

Source: IFXA Ltd/RP

FX Recap and Outlook:   What a difference a month makes.  Politicians were wringing their hands last month, after Canada lost 212,800 jobs.  Today, they will be dancing on their desks.  Canada gained 259,200 jobs in February, for a net gain of 46,400 jobs in 2021.  The unemployment rate dropped 1.2% to 8.2%.

The Bank of Canada said they were concerned about sizeable job losses in December and January.  Today’s report goes a long way in alleviating those fears.  USDCAD dropped to 1.2512 from 1.2550 on the news.

The Canadian data is a nice distraction , but the focus is on the Treasury yields.  US 10-year Treasury yields jumped to 1.605% from 1.532%

Asia equity markets closed on a mixed note .  European bourses are off their worst levels but still in the red, except for the FTSE 100.   China tensions are strained against the US ahead of next week’s Alaska Summit.  The EU imposed sanctions on China by blacklisting four senior officials.

COIVD-19 concerns are impacting sentiment in Europe.  The German Health Minister said, “we are at the start of the third COVID-19 wave.”  Italy is contemplating locking down some regions, including Milan. Even worse, AstraZeneca is reportedly shipping less than half of expected vaccines between April and June.

EURUSD traded with a negative bias, falling from .1977 to 1.1911 in NY.  Prices tracked  US 10-year yields asCOVID-19 concerns limited gains.  The  ECB decision to increase the pace of its Pandemic Emergency Purchasing Program. (PEPP) was initially though to be a dovish development.  However,  ING economists disagree because the whole PEPP was not extended and the program’s size was unchanged.

That sentiment underpinned the single currency.  Today it is a yield and pre-weekend profit-taking story that is driving direction.   The intraday EURUSD technicals are bearish below 1.1980, looking for a test of support at 1.1830.

GBPUSD dropped sharply, falling from a peak of 1.4004 to 1.3886 in NY due to both rising US Treasury yields, weak January GDP data, and pre-weekend profit-taking.  GDP fell 2.9% m/m  in January which wa better than predicted.  Industrial production and Manufacturing production data were weak.  The 40% drop in exports to the UK in January also weighed on the currency. However, the uptrend line from November is intact while prices are above 1.3830.

USDJPY traded erratically in a 108.51-109.16 range with prices supported by higher Treasury yields but weighed down by profit-taking ahead of the weekend.

AUDUSD and NZDUSD are dancing the greenback two-step.  They rise and fall with the prevailing US dollar bias, and at the moment, the bias is negative.

The Canadian dollar looks like it is punching above its weight.  It is the second strongest currency this year, just trailing the British pound.  The surge in oil prices and the outlook for even higher prices weigh on USDCAD, which is also undermined by expectations for a GDP boost from Biden’s stimulus package.

The US Michigan Consumer Sentiment Index is expected to rise to 78.5 from 76.8 previously.

USDCAD Technicals:  The intraday technicals are bearish below 1.2580, looking for a break of psychological support at 1.2500 to extend losses to 1.2450.  The long term downtrend line is intact and Fibonacci retracement on a weekly chart projects further losses to 1.2070, following the move below 1.2675, the 76.4% retracement of the  September 2017-March 2020 range.  For today, USDCAD support is at 1.2500 and 1.2450.  Resistance is at 1.2580 and 1.2610. Todays Range 1.2490-1.2570

Chart: USDCAD daily

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank