- US 10-year Treasury yields rise in thin markets
- Last day of trading for many European markets
- US consolidates yesterday’s losses but opens above the lows
FX at a Glance
Source: IFXA Ltd/RP
USDCAD Snapshot Open 1.2789-93, Overnight Range 1.2772-1.2811, close 1.2790
USDCAD tested support at 1.2770 in Asia coinciding with WTI oil inching up to $76.96/b. The move was an extension of yesterday’s losses following the EIA report that US crude inventories fell 3.6 million barrels in the week ending December 24, firm Wall Street stock prices, and broad US dollar weakness.
USDCAD may be vulnerable to month and year-end portfolio rebalancing selling pressures.
Technical view: The intraday USDCAD technicals are bearish below 1.2830 looking for a move below the 1.2760-70 area to extend losses to 1.2610. A drop will not be linear as there are many layers of support ahead of 1.2610. A break above 1.2830 targets 1.2860 then 1.2960.
For today, USDCAD support is at 1.2760 and 1.2710. Resistance is at 1.2830 and 1.2860. Today’s Range 1.2720-1.2820
Chart USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
It is the eve of New Year’s Eve, or New Year’s Adam to some. Stock traders may already be celebrating. The S&P 500 gained 28.43% YTD, and the UK FTSE 100 is up 13.4%, despite Brexit and the ongoing EU feud. Australia’s ASX 200 lagged with a 12.4% increase while the Nikkei 225 managed a 4.9% gain.
Wall Street futures are modestly higher which is weighing on the US dollar, although month end flows may be a bigger factor.
The US is averaging 265,000 COVID-19 cases per day, which is a pandemic record. The impact of the news on markets is mostly “I’m not sick, so its no big deal.”:
The US dollar index (USDX) is bouncing between 95.87 and 96.23, reflecting the poor liquidity in FX markets.
President Biden and President Putin are having a call today to discuss a number of issues, but mainly Ukraine. Russia is vehemently opposed to NATO’s plan for installing missiles and other military hardware in Ukraine, claiming it is a threat. American’s seemed to have forgotten how they reacted when Russia planned to install ICMB missiles in Cuba in 1962.
US weekly jobless claims fell 8,000 to 198,000, and the four-week moving average fell 7,250 to 199,250, the lowest level since October 1969. The results did not have much impact on FX.
EURUSD traded in a 1.1301-1.1359 range and is sitting at 1.1320 in NY. Many European markets and the ECB are closed tomorrow. ECB policymaker and Austrian Central Bank President Robert Holzman said the bank must focus on phasing out negative rates in 2022, which had zero impact on trading.
GBPUSD extended yesterdays gains reaching 1.3504 in Asia before retreating to 1.3450 in Europe. Prices gradually recovered to 1.3485 in NY trading. Month-end demand for GBP is behind the gains.
USDJPY rallied from 114.56 yesterday to 115.20 overnight on the back of the rebound in US Treasury yields.
AUDUSD and NZDUSD benefitted from month end flows, and mildly positive risk sentiment.
Chart of the Day: US Dollar Index 30 minutes
Source: Yahoo Finance
FX open, high, low, previous close as of 6:00 am ET
Chart: Saxo Bank
Today’s Bank of China Fix 6.3674, previous 6.3735
Shanghai Shenzhen CSI 300 fell 0.78% to 4,921.51
Chart: USDCNY 1 month
Source: Yahoo Finance