The ebb and flow of US Treasury yields have FX markets bopping and weaving like a puppet on a string, thanks to a dearth of actionable top-tier economic data.
Asia traders took their lead from New York and bought US dollars. USDJPY rose from 108.68 to 108.90, bolstered by US 10-year Treasury yields flirting with 3.00% and then trickled lower in Europe.
AUDUSD was hovering above 0.7600 support when domestic inflation data disappointed traders. Q1 CPI rose 1.9%, y/y but was forecast to rise to 2.0%. Prices dropped to 0.7580 on the news but quickly rebounded. There was a small upside revision to the Q4 data
NZDUSD was weighed down by bearish technicals and broad US dollar strength. Prices dropped from 0.7155 to 0.7107 before clawing back to 0.7125 at the New York open.
EURUSD dipped to 1.2185 twice overnight, the first time in Asia and again in Europe after the German IFO Survey data. April IFO Business Climate, Current Assessment and Expectations were well below forecasts. However, inclement weather is thought to have played a role in the poor readings.
Sterling trading in a similar fashion to EURUSD. It hit bottom twice overnight and continues to consolidate losses after breaking below 1.3980 support, yesterday.
The US Treasury rally took a breather, and 10-year yields backed off the 3.0% level, which gave global equity indices a lift. The soft economic reports do not bode well for those expecting a hawkish bias in the ECB policy statement on Thursday.
WTI oil prices touched $69.27 in early European trading and then drifted to $68,72 as New York opened. Concerns about new sanctions against Iran support prices.
USDCAD has not benefitted from the oil price rally. Widening CAD/US interest rate differentials thanks to Bank of Canada Governor Poloz’s dovish BoC statement, which he reiterated to the Government Finance Committee yesterday, have fueled gains.
US economic reports today are second tier but include Case-Shiller Home Price Indices ,(forecast 6.3% vs previous 6.4%) New Home Sales and Richmond Fed Manufacturing Index. There isn’t any data from Canada.
USDCAD Technical Outlook
The intraday technicals are bullish while prices are above 1.2685 and are consolidating gains inside a 1.2810-1.2860 range. A break below 1.2810 would extend losses to 1.2770 and then 1.2740/ A move above 1.2860 hangs a target on 1.3000. For today, USDCAD support is at 1.2820 and 1.2770. Resistance is at 1.2860 and 1.2890
Today’s Range 1.2810-1.2890