March 10, 2022

  • ECB walks dovish/hawkish tightrope
  • US CPI rises 7.9% as forecast
  • US dollar opens mixed, EUR outperforms

FX at a Glance 24 hours

Source: IFXA Ltd/RP

USDCAD Snapshot: open 1.2821-25, overnight range-1.2782-1.2840, close 1.2806

USDCAD traded lower yesterday and overnight due to the improved risk sentiment tone, sparked by chatter about Russia and Ukraine peace talks which fueled a steep rise in the S&P 500 index. However, a sharp drop in crude oil prices were a drag on USDCAD losses.

WTI fell to $105.00 from $126.60 after the UAE Ambassador top the US said that OPEC should boost crude supply. Shortly afterwards, the UAE oil minister said that the country was committed to the OPEC agreement.  WTI is trading at $113.30 in NY.

USDCAD direction will continue to be determined by Wall Street, and to a lesser degree, oil prices.

The Canadian economic data calendar is empty.

USDCAD technical outlook

The intraday and longer term USDCAD technicals are bullish.  The one-week uptrend is intact above 1.2780 while the uptrend from June 2021 is intact above 1.2520.  A break below 1.2780 would extend losses to 1.2740, while a move above 1.2900 targets the 1.2960-1.3000 resistance zone.

For today, USDCAD support is at 1.2790 and 1.2740.  Resistance is at 1.2860 and 1.2900. Today’s Range 1.2790-1.2890

Chart USDCAD daily

Source: Saxo Bank

G-10 FX recap and outlook

It has been a 24-hour headline-powered, financial market thrill ride.  Russian and Ukraine headlines hinting a peace/cease-fire talks unleashed a tide of bottom-fishers who either embraced “the worst is over” sentiment or merely booked profits after some wild moves.

WTI oil prices dropped 17% then rallied 8.0%.  Gold fell $88.00 then recouped $24.00 of the losses, while S&P 500 futures gained 3.5% from yesterday’s Asia low to early afternoon.  The US dollar is underpinned by the 10-year US Treasury yield, which climbed from 1.861% in Europe yesterday to 1.964% in NY today.

Some traders were excited to learn that officials were trying to arrange a Putin/Zelensky discussion, but the meeting in Turkey ended without any progress.  Others were dismayed to learn Russia bombed maternity hospitals and the city of Mariupol.

European bourses are deep in negative territory, led by a 3.26% slide in the German Dax.  Wall Street is poised to open with losses as S&P 500 futures are down 0.95%.

US inflation rose to a four-decade high of 7.9%. The result was expected and the recent surge in oil prices suggests next months result will be well-above 8.0%.

Traders ignored the 11,000 increase in weekly jobless claims to 227,000.

EURUSD traded in a 1.1026-1.1079 range overnight then popped to 1.1121 after the ECB statement.  They left rates unchanged but announced they would reduce bond purchases from €40 billion in April, to €30b in May and €20b in June with net purchases ending in Q3.  EURUSD reversed the gains ahead of President Lagarde’s press conference.

GBPUSD tracked EURUSD moves in a 1.3143-1.3193 range.  UK officials gave a red card to Chelsea football team owner Roman Abramovich, saying the multi-billionaire received preferential treatment and concessions from Russia.  His assets have been frozen.

USDJPY jumped to 116.19 from 115.82 due to sharply rising Treasury yields and questions around the Bank of Japan’s 10-year yield curve control (YCC) policy.  If the BoJ defends the 0.25% cap on 10-year JGP’s, the yen will pay the price.

AUDUSD rallied to 0.7345 from 0.7289 due to improved risk sentiment and higher than forecast Consumer Inflation Expectations (actual 79% vs73% forecast)

Chart of the Day: EURUSD

Source: Saxo Bank

FX open, high, low, previous close as of 6:00 am ET

Chart: Saxo Bank

China Snapshot

Today’s Bank of China Fix 6.3105 previous 6.3178

Shanghai Shenzhen CSI 300 rose 1.57% to 4,292.84

PBoC widens RUB/CNY range to 10% from 5%

Chinese nickel producer Tsingshan secured loans to survive the LME nickel short-squeeze

Chart: China 1 month

Source: Saxo Bank