Photo: Wikimedia

February 26, 2021

USDCAD open (6:00 am ET) 1.2646-50,  Overnight Range 1.2589-1.2648,  Close 1.2605

FX Ranges at a Glance  

Source: IFXA Ltd/RP

FX Recap and Outlook:  Traders of a certain vintage will remember “Baghdad Bob”, also known as “Comic Ali.” His real name was Muhammad Saeed al-Sahhaf, and he was Iraq’s Media and Foreign Affairs Minister.  He never let reality intrude on his version of events.  One of his more famous press conferences occurred during the US invasion of Iraq in April 2003.  He said, about US troops, “They’re not even 100 miles [of Baghdad].  They are not in any place.  They hold no place in Iraq.  This is an illusion … they are trying to sell to the others an illusion, “even as TV cameramen showed live shots of American troops and tanks at Baghdad Airport.

Yesterday, Fed officials Raphael Bostic, and Esther George had their “Baghdad Bob” moment.  !0-year US Treasury yields soared to 1.535%, and these guardians of monetary policy chirped that there was no need to respond to the rise and that it was too soon to pull back on monetary policy support.

The spike in yields was sparked by a better than expected US jobless claims data and a poor seven-year Treasury auction.  The move crushed the US stock market.  The Dow Jones Industrial Average fell 559 points, the NASDAQ plunged 3.52%, and the S&P 500 fell 2.45%.


News that Republicans were opposing Bidens $15/hour minimum wage led to fears of further delays in the planned stimulus package and exacerbated market nervousness.

Asia equity indexes closed deep in the red, led by a 4.0% fall in Japan’s Nikkei 225.  European markets have been choppy.  Early session gains have been erased.  US stock futures suggest Wall Street will open with losses today.

EURUSD dropped to its session low of 1.2093 in early NY trading.  Intraday technicals turned bullish on Thursday with the break above resistance at 1.2180.  Prices accelerated to 1.2242 before retreating to 1.2178 at the close.  It appeared that the single currency escaped the bulk of yesterdays carnage.  It didn’t

Prices continued slide overnight.

Traders ignored comments from ECB Board member Isabel Schnabel who warned that rising interest rates could undermine the fragile recovery.

GBPUSD fell fast and furiously, plunging from a peak of 1.4177 yesterday to 1.3889 today.  The move served to eliminate weak long GBP positions.  The dilemma is: Are interest rates rising enough to choke of a global economic recovery, or is the move a much-needed correction exacerbated by month-end flows?

USDJPY rallied due to the surge in Treasury yields overnight but  safe-haven demand for yen knocked USDJPY from 106.51 to 106.25 in NY

AUDUSD and NZDUSD dropped on the back of US dollar demand from rising Treasury yields.

USDCAD was oversold and found support at 1.2468 yesterday.  The Treasury yield rally sent USDCAD soaring and prices topped out at 1.2683 in NY today.  USDCAD direction is at the whim of US dollar sentiment, with traders awaiting some sort of response from the Fed.

Chicago PMI and Michigan Consumer Sentiment are due today.

USDCAD Technicals:  The intraday USDCAD technicals are bullish with the breach of resistance at 1.2560 suggesting that a short term low is in place at 1.2468 , and looking for a test of the April 2020 downtrend line which is at 1.2740. For today, USDCAD support is at 1.2580 and 1.2550.  Resistance is at 1.2680 and 1.2730. Todays Range 1.2580-1.2680

Chart: USDCAD daily

  Source:  Saxo Bank

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

Source:  Saxo Bank