Photo: Wikimedia

February 9, 2021

USDCAD open (6:00 am ET) 1.2731-35,  Overnight Range 1.2715-1.2740,  Previous Close 1.2740

FX Ranges at a Glance:

Source: IFXA Ltd/RP

FX Recap and Outlook:   The US dollar and Scarlett Ohara need smelling salts today, although it may be a tad late for Scarlett.  The US Treasury yield-fueled dollar rally turned into a minor dollar rout when yields fell.  10-year Treasury  yields dropped from 1.20% yesterday to 1.152% today, and those losses sparked broad-US dollar selling, exacerbated by an economic data void, in Europe and the US today.

Tesla’s $1.5 billion purchase in Bitcoin lifted BTCUSD from $39,188 yesterday morning to $46,220.04.  Traders’ piled into the cryptocurrency in the belief that Elon Musk’s purchase will attract other large buyers.  This rally looks very similar to GameStop (GME: NYSE), and that didn’t end happily.

Chart: BTCUSD this week


EURUSD rallied to 1.2116 from 1.2048, and prices are trading just below the peak in early NY hours.  Risk sentiment is positive with falling coronavirus cases worldwide, even though Europe is still struggling with outbreaks and a slow vaccine roll-out.

The short term technicals are bullish, with the moves above 1.2050 and 1.2080 targeting 1.2150.

GBPUSD rose from 1.3740 to 1.3788, due to broad US dollar weakness, continuing to bask in the glow of the last week’s Bank of England monetary policy meeting.  The BoE put negative interest rates on the back-burner, and issued a somewhat upbeat outlook.  The UK is well ahead of other G-10 nations with its COVID-19 vaccinations suggesting its economy will recover quicker than the competition.  However, Bollinger bands and RSI’s suggest GBPUSD is becoming overbought.

USDJPY tumbled with the drop in US Treasury yields, falling from 105.26 to 104.55.  Technical traders are looking for a break below 104.10 to extend losses to 101.00

AUDUSD and NZDUSD rallied due to broad US dollar selling pressures and firmer commodity prices.  NZDUSD received additional support from Q1 Inflation Expectations which were 1.89% q/q compared to 1.59% previously.

USDCAD dropped on the back of broad US dollar weakness, rising oil prices and bearish technicals.  West Texas Intermediate (WTI) climbed to $58.59 overnight, the seventh increase in a row.  Traders are also keeping an eye on CAD/US interest rate differentials, due to the recent rise in US Treasury yields.

There are not any economic data releases of note from the US or Canada today.

USDCAD Technicals: The intraday technicals are bearish.  The failure to extend gains above 1.2650, and the subsequent drop below 1.2780 targets a break below 1.2630 to extend losses to 1.2520. For today, USDCAD support is at 1.2710 and 1.2660.  Resistance is at 1.2760 and 1.2790  Today’s Range 1.2690-1.2760.

Chart: USDCAD 1 week

Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank