Source: IFXA Ltd/RP
FX Recap and Outlook: It was a topsy-turvy FX session for the US dollar. Dollar buyers gave way to sellers as traders weighed risks from rising US interest rates. Asia equity markets saw a 3.14% drop in the Shanghai Shenzhen CSI 300 index but increases in Japanese and Australian markets.
European are down but off their worst levels while Wall Street futures suggest a negative open.
Bitcoin (BTCUSD) posted another all-time high. It touched $58,332.36 before sliding 4.21% to $54,869.18. Elon Musk may have had something to do with the drop. He tweeted that bitcoin prices “seemed high”.
Fed Chair Jerome Powell testifies before congress tomorrow and Wednesday. He is expected to highlight his employment concerns, downside risks to the economy from the pandemic, and dismiss higher inflation concerns as temporary.
EURUSD traded sideways in Asia then sank at the European open, falling from 1.2133 to 1.2092. The release of better than expected German IFO data saw prices climb sharply, reaching 1.2144 in NY trading. Widening interest rate differentials between the EU and US and expected underperformance of the EU economy suggest gains will be capped around the 1.2150 area.
GBPUSD is rather perky. Prices climbed from 1.3982 to 1.4051 and are trading at 1.4020 in NY. The currency continues to benefit from capital inflows and anticipation for a robust, post-pandemic economic recovery. The GBPUSD uptrend channel is intact while prices are above 1.3900.
USDJPY tracked US treasury yields, rising from 105.38 to 105.84 when 10-year US Treasury yields climbed to 1.395%.
AUDUSD and NZDUSD opened with small gains compared to Friday’s close.
AUDUSD is supported by high commodity price. Both currency pairs got a bit of support after S&P ratings news. New Zealand’s debt rating was raised to AA+, outlook stable, and Australia’s AAA rating was reaffirmed.
USDCAD traded down in Asia, then bounced in Europe. USDCAD underperformed against its antipodean peers. The Federal governments bungling of COVID-19 vaccine delivery may be a factor. However, steady to firm crude prices are limiting gains. On the other hand, if Canada ramps up vaccines and oil prices remain at current levels, USDCAD may extend losses below 1.2590.
There are not any economic reports of note today.
USDCAD Technicals: The intraday USDCAD technicals are bearish below 1.2650, looking for another probe of support in the 1.2580-90 area to extend losses to 1.2500. A break above 1.2650 would target 1.2690 For today, USDCAD support is at 1.2580 and 1.2550. Resistance is at 1.2650 and 1.2690. Todays Range 1.2590-1.2660
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank