- The year is ending in a three-ply mask
- Equity markets (those that were open) saw limited action
- US dollar ending year on the defensive
FX at a Glance
Source: IFXA Ltd/RP
USDCAD Snapshot Open 1.2723-27, Overnight Range 1.2718-1.2740, close 1.2739
USDCAD extended yesterday’s losses in holiday-thinned overnight markets, largely due to month and year end demand for Canadian dollars by portfolio managers as the S&P 500 is poised to finish the month with a 4.6% gain.
Month end demand, and falling US crude inventories lifted WTI to $77.05/barrel before profit-taking knocked them back to $76.30/b. Nevertheless, the firmer oil prices are undermining USDCAD.
USDCAD trading may get a tad choppy around the 11:00 am fix, and then fade as traders get an early start to the long weekend.
Technical view: The intraday USDCAD technicals are bearish below 1.2805 supported by the break of 1.2770, the October 27 uptrend line. That breach will lead to a test of the 38.2% Fibonacci retracement level of the Oct-Dec range at 1.2707, which is also where previous tops and bottoms resided. A decisive move below that area targets the 61.8% retracement level of 1.2550.
However, year end technicals are notoriously unreliable and this year is no different.
For today, USDCAD support is at 1.2705 and 1.2660. Resistance is at 1.2750 and 1.2790. Today’s Range 1.2660-1.2750
Chart USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
Happy New Year’s from your friends at Agility Foreign Exchange.
It’s already 2022 in Auckland, New Zealand. Kiwi’s did not see their traditional New Years’ Eve fireworks show, but that didn’t stop them from gathering. It is also a precursor to how New Year’s Eve celebrations around the world will unfold. Thankyou Omicron!
It’s the last trading day of the year, and it is a short one, thanks to early bond and equity market closures in the US.
US traders do not get a New Years Day holiday on Monday, either. MarketWatch reported that “the exchange will be closed either Friday or the following Monday if the holiday falls on a weekend, unless “unusual business conditions exist, such as the ending of a monthly or yearly accounting period. In this case, the last day of December is a trifecta of accounting dates, including month-, quarter- and year-end dates.” Scrooge the rules.
The Biden/Putin video call was more divorce settlement than marriage proposal. The White House said, “President Biden urged Russia to de-escalate tensions with Ukraine. He made clear that the United States and its allies and partners will respond decisively if Russia further invades Ukraine.”
Putin’s response was just as confrontational. Russia’s foreign policy advisor said, “Our president immediately responded that if the west decides in this or other circumstances to impose these unprecedented sanctions which have been mentioned then that could lead to a complete breakdown in ties between our countries and cause the most serious damage to relations between Russia and the west.”
FX traders ignored the news, but risk-averse investors did not. Gold rallied from $1789.00 in NY yesterday morning to $1820.13 this morning.
EURUSD traded in a 1.1304-1.1336 range, with most of Europe closed due to New Year’s holidays. GBPUSD traded sideways in a 1.3491-1.3519 range, while USDJPY traded modestly lower to 115.02 due to a slightly softer US 10-year Treasury yield.
There are no economic reports today.
Chart of the Day: Gold (XAUUSD) 30 minute
Source: Yahoo Finance
FX open, high, low, previous close as of 6:00 am ET
Chart: Saxo Bank
Today’s Bank of China Fix 6.3757, previous 6.3674
Shanghai Shenzhen CSI 300 rose 0.38% to 4,9240.36
NBS December Manufacturing PMI 50.3 vs November 50.1
December Non-manufacturing PMI 52.7 vs November 52.3
Chart: USDCNY 1 month
Source: Yahoo Finance