FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook: FX traders were skittish to start the week. Turkey President Erdogan fired the Central Bank Governor on the weekend. The move was in response to the Governor surprising markets and (Erdogan) when he hiked interest rates from 17.0% to 19.0%. USDTRY soared around 15%, rising to 8.4749 from 7.2020 at Friday’s close. Prices have since retreated to 7.8540 in NY.
Asia traders were concerned about ripple effects in other emerging markets and in Europe and bought US dollars as a safe haven. Those fears dissipated in Europe and in NY and the US dollar gave back its gains.
Chart: 30 minute USDTRY
Source: Saxo Bank
Markets were also concerned about the impact of the Fed’s decision not to extend the Supplementary Leverage Ratio (SLR). Fears that Treasury yields would soar proved unfounded. The 10-year US Treasury yield is trading at 1.677% as of 6:26 am ET.
Traders are fretting over what is described as Europe’s “third wave” coronavirus outbreak. Germany, France, and Italy have all reimposed various restrictions and lockdowns.
Asia equity indexes closed on a mixed note. The Nikkei and Hang Seng lost ground while China’s Shanghai Shenzhen CSI 300 and Australia’s ASX 200 posted gains. European bourses and Wall Street futures are mixed.
EURUSD is trading at the top of its overnight 1.1874-1.1930 range as earlier risk-aversion fears gave way to optimism. The drop in 10-year Treasury yields from Thursday’s peak of 1.753% to 1.682% today, even after the Fed opted against extending the Supplementary Leverage Ratio (SLR), has traders in a better mood. EURUSD technicals are bearish below 1.1940, looking for a retest of the 1.1840 low.
GBPUSD found its bottom in Asia at 1.3819 then climbed steadily to 1.3872 before easing to 1.3856 in NY. The EU is halting shipments of AstraZeneca’s vaccine to the UK, as EU politicians try to appear competent in managing the Eurozone vaccine roll-out.
USDJPY drifted lower alongside the slide in US 10-year Treasury yields. Prices are consolidating losses after breaking the bottom of the February uptrend channel, with a break below 108.30 shifting the focus to 107.00.
AUDUSD recovered from its overnight low due to the broad US dollar retreat and higher commodity prices. NZDUSD tracked AUDUSD moves
USDCAD spiked to 1.2530 in Asia, then slid steadily to 1.2475 in NY trading as the US dollar gave back gains and oil prices climbed.
WTI oil rose from $60.36/barrel to $61.76 following Saudi Aramco CEO comments forecasting higher global demand.
USDCAD continues to be undermined by expected domestic economic benefits from the US stimulus program.
USDCAD rallied to 1.2530, which also was the downtrend line from March 5. Prices retreated alongside broad US dollar selling vs the majors, with a bounce in oil prices giving an assist. Crude prices are supported by comments from Saudi Aramco CEO forecasting higher oil demand in 2021.
The US and Canadian data calendars are empty.
USDCAD Technicals: The intraday technicals are bearish following the failure to crack above the March 5 downtrend line at 1.2530, which suggests a retest of support in the 1.2460 area is in the cards. A break below 1.2460 would extend losses to 1.2410. A break above 1.2530 targets 1.2580. For today, support is at 1.2460 and 1.2410 Resistance is at 1.2530 and 1.2580. Todays Range 1.2460-1.2530.
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank