- Markets dancing to Russian tune
- Canada Retail Sales not as weak as expected
- US dollar quiet overnight, down for the week
FX at a Glance Friday Feb 11-to Friday Feb 18)
Source: IFXA Ltd/RP
USDCAD Snapshot: Open 1.2699-03, Overnight Range-1.2676-1.2716, previous close 1.2709
USDCAD barely budget following the December Retail Sales data. The results were weak, but not as bad as expected, falling 1.8% m/m compared to the forecast for a 2.1% decline. The significance of the data for FX traders was greatly diminished as the results were tarnished by the strict measures imposed to combat the Omicron virus.
Canadian house prices increased 0.9% m/m in January.
USDCAD direction continues to be at the whim of US dollar sentiment but steady to firm oil prices will act as a drag on gains. In addition, the BoC is expected to match or beat any Fed rate hikes.
Technical view: The intraday are unchanged. USDCAD is rangebound in a 1.2640-1.2770 band. A topside break would extend gains to 1.2840 while a downside drop targets 1.2574. The uptrend line from June 2021 is intact above 1.2500.
For today, USDCAD support is at 1.2670 and 1.2640. Resistance is at 1.2730 and 1.2770. Today’s Range 1.2640-1.2730
Chart USDCAD daily
Source: Saxo Bank
G-10 FX recap and outlook
Traders mostly took a day off overnight. They ignored comments from central bankers in Europe and the US, content to stay sidelined due to elevated headline risk around Russia and the Ukraine. Traders have another reason not to be motivated. Nasty weather in the UK, and holidays in the US and Canada on Monday will discourage trading.
Concerns that Russia would invade the Ukraine diminished after news that Russia Foreign Minister Sergey Lavrov and US Secretary of State Antony Blinken and will meet next week. President Putin reiterated that Belarus drills were defensive and not a threat. Belarusians may think otherwise.
Wall Street closed deep in negative territory. The major Asian indexes followed suit but to a lesser degree. Australia’s ASX 200 lost 1.02% while the Nikkei 225 gave up 0.41%.
European bourses gave up earlier gains and are all in negative territory on reports of artillery fire into the Ukraine. The news erased earlier S&P 500 and DJIA futures gains and they are near overnight lows. Gold and oil prices declined while the US 10-year Treasury yield is 1.936%, well below Wednesday’s peak of 2.063%.
EURUSD traded sideways in a 1.1348-1.1376 band The single currency was underpinned by remarks from ECB officials about the need to adjust monetary policy in the face of rising inflation and concerns that CPI may not reach the target for at least two years.
GBPUSD is at the bottom of its 1.3602 to 1.3641 range. GBPUSD has given back all the gains following better than expected UK Retail Sales data (actual 1.9% m/m vs forecast 1.0%). NatWest bankers are smiling because the bank boosted the bonus pool by 44%. Clients should be wondering if they are paying too much in fees or FX spreads.
USDJPY see-sawed in a 114.80-115.29 range with prices tracking US Treasury yields, as usual.
AUDUSD remained underpinned despite RBA board member Ian Harper saying markets are misguided in thinking the RBA will follow the Fed rate hike path. NZDUSD tracked AUDUSD price action ahead of what is expected to be a bullish RBNZ meeting next Wednesday.
FX open, high, low, previous close as of 6:00 am ET
Chart: Saxo Bank
Today’s Bank of China Fix 6.3343, previous 6.3321
Shanghai Shenzhen CSI 300 rose 0.48% to 4651.24
Chart: China 5 day
Source: Saxo Bank