Markets indecisive ahead of NFP
China wants to change its image
WTI consolidating gains, maintains bullish bias
USDCAD open 1.2076-80, Overnight range 1.2059-1.2090, Previous close 1.2071
FX at a Glance-24 hours
FX Recap and outlook
FX traders are in their fancy duds but have nowhere to go as a dearth of data leaves markets directionless until Friday’s US nonfarm payrolls. The forecast is for a gain of 645,000, but analysts are nervous in case there is a repeat of last months disappointing result.
China wants to change its image. President Jinping must believe his “bully-boy” antics are not winning China any friends. He told officials they need to create a “trustworthy, lovable and respectable” image for the country.
Asia equity indexes finished the day with Japan’s Nikkei 225 and Australia’s ASX 200 indexes posting gains, while the Hong Kong Hang Seng index retreated. European bourses are modestly higher, as are S&P 500 futures.
WTI oil gained, gold is flat, and US 10-year Treasury yields drifted lower to 1.60%. The US dollar higher except against AUD and CAD.
EURUSD continues to bounce inside the well-defined 1.2150-1.2250 range. Prices drifted higher in Asia, rising from the close of 1.2214 to 1.2226, then dropped to 1.2170 in Europe after disappointing German March Retail Sales numbers (actual -5/.5% m/m vs forecast -2.0%). EURUSD is supported by the improving Eurozone recovery expectations as the vaccine roll-out gathers steam but getting headwinds from US inflation fears. The intraday EURUSD technicals are bullish while prices are above the 1.2150-60 level.
GBPUSD rejected a move above 1.4245 yesterday and closed at 1.4150 with a negative bias. Prices chopped about in a 1.4127-1.4163 overnight. Prices are getting a bit of support after a couple of Bank of England policymakers said they monitor house prices for a more generalized inflation threat. GBPUSD has support at 1.4100 and 1.4000.
USDJPY traded sideways in a 109.45-109.85 range with prices underpinned by broad US dollar strength.
AUDUSD rallied in Asia, climbing to 0.7772 from 0.7752 before dropping to 0.7717 in Europe. Prices recovered somewhat in NY trading. Australia GDP rose 1.8% in Q1, compared to the forecast of 0.6%, but the data was largely ignored. NZDUSD underperformed against AUD and traded in a 0.7217-0.7271 range.
WTI oil is higher due to Opec agreeing to maintain phased in production increases.
USDCAD whip-sawed yesterday, dropping to 1.2008 just before lunch, then rallying to 1.2071, where it closed. Prices consolidated those gains in a 1.2059-1.2090 range overnight. USDCAD remains under pressure from rising oil prices and expectations for a robust, post-pandemic domestic economic recovery.
Today’s US data includes the Beige Book. FX markets are likely to be choppy but inside existing trading bands until Friday’s NFP report.
USDCAD technical outlook
USDCAD tested support and resistance in the past 24 hours and did not manage to resolve anything. The intraday technicals are bearish below the 1.2080-90 area but that level is vulnerable while prices are above 1.2060. A topside break would extend gains to 1.2150. For today, USDCAD support is at 1.2060 and 1.2000. Resistance is at 1.2090 and 1.2150. Today’s range 1.2000-1.2090.
Chart USDCAD 4 daily
Source: Saxo Bank
FX open, high, low, previous close
Source: Saxo Bank