- Russian menacing but not attacking Ukraine
- Global equities extend losses, Treasury yields sink
- US dollar rises on safe-haven demand
FX at a Glance
Source: IFXA Ltd/RP
USDCAD Snapshot: Open 1.2771-75, Overnight Range-1.2723-1.2782, previous close 1.2736
USDCAD is close to the top of the 1.2640-1.2790 range that has contained prices since January 26. Prices are supported by broad safe-have demand for US dollars, while soaring crude prices slow gains.
WTI climbed from $92.60/barrel to $94.90 overnight before sliding to $92.62 in NY trading. Traders fear an oil supply disruption if Russia invades Ukraine, and the EU/US responds with sanctions. Making this worse, Opec is still not pumping crude at its output targets after missing January’s quota by 900,000 b/day. Another issue is that misguided green energy policies curtailed oil investment and now the industry is unprepared to meet surging demand.
USDCAD price action will be guided by S&P 500 moves and that index is attempting to recover overnight losses in pre-market trading.
Technical view: The intraday technicals are bullish while above 1.2670 with the break above 1.2750 setting the stage for another probe of resistance in the 1.2800-30 area. Failure to break above 1.2790 suggests a return to 1.2670.
For today, USDCAD support is at 1.2730-1.2670. Resistance is at 1.2790 and 1.2830. Today’s Range 1.2690-1.2790
Chart USDCAD hourly
Source: Saxo Bank
G-10 FX recap and outlook
Love is in the air but more importantly for Ukraine, no Russian missiles or artillery. Friday, President Biden and other US officials stoked fears of an imminent Russian invasion of Ukraine with WMD-style hyperbole and threats.
Wall Street tanked. The Dow Jones Industrial Average lost 503 points while the S&P 500 fell 1.90%. Asian equity traders grabbed the baton and ran with it. The Nikkei closed down 2.23% while the Australian ASX 200 outperformed, rising 0.37% thanks to gold prices. The German Dax dropped 3.05%, leading European bourses lower, and Wall Street futures are in negative territory. Gold and oil prices are higher, while US 10-year Treasury yield is at 1.927% after closing at 1.943% Friday.
You know it’s a slow news day when Canada is mentioned on the front page of the New York Times, Wall Street Journal, and Washington Post, thanks to anti-government protests blocking key border crossings. Police and the threat of $100,000 fines and imprisonment reopened Windsor’s Ambassador Bridge. Prime Minister Trudeau said closing the border and ruining the economy is his job, not “fringe elements.”
EURUSD dropped Friday in the wake of the dovish comments from ECB officials and the Biden Administration’s fear-mongering about Russia. EURUSD fell from its Asia peak of 1.1368 to 1.1302 in early NY. There were not any Eurozone data releases leaving FX traders to take direction from equity price action. That will continue to be the story today. The EURUSD technicals suggest a test of 1.1140 on a break of 1.1280.
GBPUSD is trading near the bottom of its overnight 1.3497-1.3571 range. Prices are suffering from the heightened Russia/Ukraine tensions but continue to be underpinned by last weeks better than expected UK GDP data. The December uptrend is intact above 1.3430, a level guarded by support at 1.3480.
USDJPY retreated on safe-haven demand for yen and the US 10-year Treasury yield drop from 2.064% last week to 1.928% in NY trading today.
AUDUSD and NZDUSD retreated due to broad US dollar demand. AUDUSD losses were exacerbated by last week’s comments from RBA Governor that he is happy to wait and see how data develops before moving on rates.
There is no data of note on tap today.
Chart of the Day: Gold daily
Source: Saxo Bank
FX open, high, low, previous close as of 6:00 am ET
Chart: Saxo Bank
Today’s Bank of China Fix 6.3664, previous 6.3681
Shanghai Shenzhen CSI 300 fell 1.08% to 4551.69
Chinese authorities inspect domestic commodity exchanges and major ports and vowed to crack down on hoarding and speculation of iron ore.
China and EU leaders to hold virtual summit April 1. EU will firmly back Lithuania in its spat with Beijing that started over how Taiwan was referred to by Lithuania.
Chart: China 1 month
Source: Saxo Bank