April 26, 2021
EUR ignores soft German IFO data
US dollar opens lower
FX at a Glance
New Zealand and Australia were closed for ANZAC Day, which led to a slow start for markets. Asia equity indexes were mixed, with Japan’s Nikkei rising 0.36% and the Hong King Hang Seng index slipping 0.43%. European bourses are flat to positive while S&P 500 futures are a tad lower 10-year Treasury yields inched higher to 1.58%.
EURUSD climbed to 1.2117 from 1.2090, supported by traders hoping for a benign FOMC meeting result. Gains were capped by weaker than expected German IFO Survey data. ING economists suggested that Current Conditions (actual 94.1 vs forecast 94.5), Business Climate (actual 96.8 vs 97.7), and Expectations (actual 99.5 vs forecast 101.4) point to a pause in the German economic rebound. They expect a strong second-half. EURUSD is vulnerable to a corrective sell-off to 1.1980 if it cannot break above 1.2140.
GBPUSD is feeling feisty. Prices climbed from 1.3867 to 1.3928, supported by optimistic comments from Bank of England Deputy Governor Broadbent Ben Broadbent predicted “very rapid growth over the next couple of quarters.” The rally got an assist from S&P ratings reaffirmation of the UK’s debt AA Stable. The intraday GBPUSD outlook is bullish, targeting further gains to 1.4010.
USDJPY traded lower in a 107.65-107.96 band. Prices continued to be pressured by foreign bond demand by Japanese institutions while traders ignored the drift higher in US Treasury yields. Japan February Leading Indicators 98.7, weaker than the forecast of 99.7.
AUDUSD and NZDUSD trading was muted due to National holidays but both currency pairs climbed due to broad-based us dollar weakness.
USDCAD extended its overnight losses in early NY trading, with prices dropping to 1.2442. The currency pair continues to be weighed down by the Bank of Canada’s surprise hawkish tilt. Several provinces implemented harsh coronavirus restrictions and lockdown orders between the Bank of Canada’s March and April monetary policy meetings. For some reason, that news inspired the Governing council to sharply raise their 2021 GDP forecast by 2.5% to 6.8%, and essentially pre-announce a rate hike in the second-half of 2022. FX traders reacted by selling USDCAD as the prospect of higher domestic rates and rising oil prices suggest USDCAD may probe support in the 1.2000 before the year is out.
The intraday technicals are bearish. The break below 1.2500 which represented significant support on the way down will revert to resistance. The downtrend is intact below 1.2490 with little in the way of support until 1.2370. For today, USDCAD support is at 1.2410 and 1.2370. Resistance is at 1.2480 and 1.2520. Today’s Range 1.2410-1.2480.
Chart: USDCAD daily
FX open, high, low, and previous close
Source: Saxo Bank