March 27, 2020
USDCAD open (6:00 am EST) 1.4098-02 Overnight Range 1.3992-1.4081
- Asia equities rise, European equities sink and S&P Futures in the red (6:00 am EST)
- Covid-19 confirmed cases and death toll continues to rise in Europe; US is the world-leader in coronavirus cases
- Oil prices slide, but are still modestly higher since Monday.
- US dollar inches higher on profit taking but poised to finish the week with steep losses
Chart: Currency gain/loss (%) against the US dollar from Mon. NY open to Fri.NY open (6:00 EST)
Source: Saxo Bank/IFXA
FX Recap and outlook: Fifty-two years ago, the Moody Blues offered rides on their see-saw. Equity and FX traders took them up on their offer, overnight as prices in both asset classes went up and down. Asia stock markets followed Wall Street’s lead and rallied. Australia’s S%PASX was the exception. European bourses rose early but quickly turned negative, along with S&P futures. Oil prices stutter-stepped lower, and FX markets traded mixed. The UK Guardian reported COVID-19 confirmed cases totalled 537,808 as of today, with 24,126 deaths.
EURUSD traded higher in Asia, with prices supported by Thursday’s massive US weekly jobless claims (actual 3,283,000) underscoring Fed Chair Powell’s comment that the US economy may already be in recession. EURUSD rose from 1.1033 at the US close to 1.1086 in Asia before sliding to 1.1009 in NY, in part due to profit-taking after this week’s rally. Nevertheless, EURUSD is still up 2.98% from Monday’s open. Traders are also concerned about the weak EU response to the Coronavirus crisis. EU policymakers say they need two more weeks to formulate a response.
GBPUSD posted a 5.32% gains since Monday’s NY start. Prices climbed to 1.2305 from 1.2135 just before NY opened. UK PM is taking the coronavirus crisis seriously-He tested positive for COVID-19.
USDJPY tracked Nikkei 225 moves, which closed with a 3.88% gain and the roller-coaster moves in US 10-year Treasury yields. They rose from 0.778% to 0.853% then dropped to 0.772% in early NY trading USDJPY bounced in a 108.24-109.68 range, with the massive US jobless claims numbers weighing on prices, as well.
AUDUSD and NZDUSD are closing the week virtually tied for being the best performing G-10 major currencies since Monday. They rose by 5.43% and 5.41% respectively.
USDCAD continues to track broad US dollar moves and oil prices. WTI oil rose from $20.82/barrel at the beginning of the week to $23.61/b today, which helped drive USDCAD from 1.4560 to 1.4066 today. Canada like most of the world is facing a severe recession, which will be exacerbated by the decimation of the oil industry.
The US dollar could rally and equity markets fall, on the back of profit-taking ahead of the weekend.
USDCAD technical outlook
The intraday technicals are bearish below 1.4105, looking for a move below support at 1.3980 to extend losses to 1.3810. A break above 1.4110 targets 1.4190. The daily chart suggest support at 1.3980 will hold because USDCAD is close to being oversold. For today, support is at 1.4020 and 1.3980. Resistance is at 1.4110 and 1.4190
Chart: USDCAD daily
Source: Saxo Bank
