USDCAD open (6:00 am ET) 1.2683-1.2687, Overnight Range 1.2625-1.2698, Close 1.2657
Source: IFXA Ltd/RP
FX Recap and Outlook: Asia opened with a positive tone due to Wall Street’s upbeat finish and news that the Senate passed Biden’s spending bill. Robust Chinese trade data helped. Sentiment changed just before Europe opened when Treasury yields started climbing, which drove Asia equity indexes lower and turned US dollar bears into bulls. European bourses are higher, and Wall Street equity futures are modestly lower.
Oil prices rallied after Yemeni rebels fired missiles at a Saudi Aramco site and other military targets. The gains were erased and, WTI prices are unchanged at $66.29 compared to Friday’s NY close.
EURUSD dropped from 1.1931 to 1.1866. Traders are blowing out stale long EURUSD positions due to expectations that US growth and vaccine distribution will seriously outpace that of the EU at the same time as US yield differentials vs the EU widen. German Industrial Production data was weaker than expected. The break below 1.1900 targets further losses to 1.1760.
GBPUSD outperformed the other major G-10 currencies in a 1.3802-1.3864 range. A YouGov poll noted Consumer confidence was at its highest level since the pandemic which underpinned prices. Bank of England Governor Andrew Bailey said, ““positive but with large doses of cautionary realism.” The intraday technicals are modestly bullish above 1.3800.
USDJPY is at the top of its 108.32-108.60 range, underpinned by firm Treasury yields. The technicals are bullish above 107.80, looking for a break above 109.30 to extend gains to 110.15.
AUDUSD and NZDUSD attempted to rally after China’s robust trade numbers, but those gains didn’t last. Prices dropped on the back of broad US dollar strength vs the majors and falling equity prices.
USDCAD rallied, but high oil prices acted as a drag on US dollar gains. Traders are looking ahead to the Bank of Canada meeting Wednesday even though there will not be a press conference. That suggests monetary policy and guidance will be unchanged.
There are not any key economic releases from the US or Canada leaving FX direction dictated by Treasury yields.
USDCAD Technicals: The intraday USDCAD technicals are bullish above 1.2640 looking for a break of the March 2020 downtrend line at 1.2720 to extend gains toward 1.2850. Failure to take out 1.2720 suggests the rally is merely a correction. For today, USDCAD support is at 1.2640 and 1.2610. Resistance is at 1.2720 and 1.2750. Todays Range 1.2640-1.2710
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank