Photo: Pixabay
GBPUSD surges on weak Dollar and Scottish election results
Oil prices higher as cyber attack shuts US pipeline
US dollar opens weak, due to Friday’s NFP data
USDCAD open 1.2119-24, Overnight Range 1.2096-1.2131, close 1.2131
FX at a Glance
FX Recap and Outlook
Friday’s weaker than expected US nonfarm payrolls report (Actual 266,000 vs forecast 978,000) sparked a blizzard of positive risk sentiment. The results were seen as evidence that the US economy was not in danger of overheating. 10-year Treasury yields plunged to 1.526% from 1.565%, Gold prices rallied, and the US dollar sank.
The positive risk sentiment was evident in Asia overnight. Australia’s ASX 200 led Asian equities higher, except for the major Chinese indexes, which were flat. European traders are cautious, and the major bourses are flat to lower. In early NY trading, S&P futures are flat, while oil and gold prices are higher. 10-year Treasury yields recouped all of Friday’s losses and are 1.581%.
Oil prices caught a bid after a ransomware attack shut down Colonial Pipeline, the largest refined products pipeline in the US.
EURUSD broke above resistance in the 1.2140 area following the weak NFP report and consolidated in a 1.2138-1.2176 range overnight. Prices are underpinned by hopes for a US fueled, global economic boom, with the Fed leaving monetary policy unchanged. ECB Chief Economist Philip Lane suggested the ECB will discuss tapering at the June meeting: ”We can increase or decrease our purchases depending on what is necessary to keep financing conditions favourable”. EURUSD sentiment is positive, with traders looking for gains to 1.2240.
GBPUSD soared to 1.4099 in early NY trading, from an Asia low of 1.3982 after news the Scottish National Party (SNP) failed to win a majority (won 64 seats, needed 65) in the election, reducing the risk of a Scottish independence referendum. Halifax House price data supported the rally. The break above resistance at 1.4010 sets the stage for a test of 1.4230, the 2021 peak.
USDJPY sank with the drop in 10-year Treasury yields on Friday, falling from 109.25 to 108.50. Prices recovered to open at 108.75 in NY with traders focused on Wall Street developments and treasury yields. Sentiment is mildly bearish with a break below 108.30, suggesting a retest of the 107.50 area.
AUDUSD and NZDUSD rallied due to positive risk sentiment. Weaker than expected Australia March Retail Sales data (actual 1.3% m/m vs forecast 1.4%) was ignored.
USDCAD is consolidating Friday’s losses, which occurred despite weaker than expected Canadian and US employment reports. Canada lost 207,000 jobs in April, which is hardly evidence of an economic recovery from the ravages of lockdown measures and restrictions due to the coronavirus pandemic. USDCAD is already 10 big figures lower than it was prior to the pandemic, and the economy is in terrible shape. It is hard to believe the USDCAD losses are sustainable.
There are not any US or Canadian economic reports of note today.
USDCAD Technical Outlook
The intraday USDCAD technicals are bearish below 1.2190, looking for a test of long term support in the 1.2040-55 area. A decisive break below 1.2040 targets 1.1950 then 1.1750. A break above 1.2190 suggests a 1.2090-1.2390 consolidation phase. For today, USDCAD support is 1.2090 and 1.2050 Resistance is at 1.2130 and 1.2190. Today’s Range 1.2090-1.2150.
Chart: USDCAD 4 hour
FX open, high, low, previous close
Source: Saxo Bank
