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February 16, 2021

USDCAD open (6:00 am ET) 1.2631-35  Overnight Range 1.2612-1.2690,  Friday Close 1.2690

FX Ranges at a Glance-Friday NY close until Tuesday NY open

Source: IFXA Ltd/RP

FX Recap and Outlook:  Canada and the US return from a long weekend to a snow day.   Bonus.  A winter storm wreaked havoc from Texas to Toronto and parts in-between.   The storm also knocked oil wells and refineries off-line, which sparked a spike in crude oil prices.

Asia equity traders are in a good mood.  The Nikkei rose to 30,467.75, a gain of 1.28%, the Hang Seng climbed 1.9%, and Australia’s ASX 200 rosed 0.70%.  European equity indexes gave up early gains and are trading in negative territory (6:20 am ET),  Wall Street is poised to start the week on an upbeat note.

The US/China spat continues.  China is reportedly contemplating limiting exports of  17 rare -earth minerals to the US, which would be a blow to the defence industry.

Bitcoin (BTCUSD) added to its bits and traded at $50,335.72, after reports that JPMorgan  and Moprgan Stanley were reportedly contemplating getting involved.

The global reflation trade is alive and kicking.  US 10-year Treasury yields are just below resistance at 1.25%, which if broken will extend gains to 1.30%  Bond traders believe  US inflation will continue to rise while Jerome Powell and the Fed disagree.

EURUSD finally cracked 1.2150 resistance overnight, rising to 1.2167, with 1.2200 acting as a magnet.  There is a chunky 1.5 billion option at that price which expires at 10: am ET.  Prices were supported by better than expected German ZEW data.  The  Indicator of Economic Sentiment increased again considerably in the current February 2021 survey, climbing 9.4 points to a new reading of 71.2 points compared to January.  The Survey noted that “Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations.”

GBPUSD continued to climb, rising from a low of 1.3775 on Friday to 1.3950 today.  It has been almost three years since the currency has seen that level.  The UK’s COVID-19 vaccination progress is boosting hopes for a robust economic recovery, and broad US dollar weakness is underpinning prices.

USDJPY rallied on the back of higher Treasury yields but the rally stalled around the 200-day moving average (105.53).  Bank of Japan Governor Haruhiko Kuroda reiterated the central bank’s support for the economy and warned of high uncertainty around the economic outlook.

AUDUSD rallied alongside broad US dollar weakness.  The minutes from the RBA meeting of February 2 underpinned prices didn’t provide any new insight.

USDCAD dropped to a low of 1.2612 with prices undermined by WTI oil enjoying a brief peek above $60.00/barrel. Prices then bounced reaching 1.2670 in NY trading. Widespread US dollar selling pressures and bearish technicals also weighed on prices.

There are not any notable economic reports released in Canada or the US.   Trading activity may be subdued due to nasty weather in large parts of the US.

USDCAD Technicals: The intraday technicals are bearish below 1.2650, which guards the longer term downtrend line which is at 1.2800  A break below 1.2590 targets 1.2550, then 1.2460.  For today, USDCAD support is at 1.2610 and 1.2590.  Resistance is at 1.2690 and 1.2740 . Today’s Range 1.2610-1.2710

Chart: USDCAD daily

  Source:  Saxo Bank

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

Source:  Saxo Bank