Loonie Underperforms

WTI crude found support Wednesday morning at $52.25 U.S. from its resistance level of $53.75 set in last week's high. The technical level is the ascending trend line, starting last June's high of $51.81 U.S. and October's high of $52.22 U.S.. Oil inventories were released at 10:30 a.m. EDT today. Last week, inventories were down 2.2 million. The Canadian continues to fall against its U.S., British and European counterparts.

Today, investors have the U.S. Beige Book release at 2 p.m. EDT, giving them the current economic conditions in the 12 districts of the Federal Reserve. Fed officials use this information to decide whether to raise or cut rates. U.S. dollar longs are being unwound citing reflationary concerns; this is the act when a government stimulates an economy by increasing the money supply and/or lowers taxes. Goldman Sachs cut its long dollar positions on the concept, and investors are hearing of the same concerns within the mutual fund industry with money flowing out of U.S. equities. Bets on a Federal Reserve rate hike in June have fallen below 50%.

Experts expect a range today of $1.3400 to $1.3464 for the Canadian dollar.

European inflation in March was essentially in line with expectations at 1.5% y/y on the headline and 0.8% y/y on the core. Trade Balance in February also released better than expected at 19.2 billion when the forecast was for 18.5 billion. The euro is higher from yesterday’s close and is currently trading at $1.4402.

Observers expect a range today of $1.4354 to $1.4449

The sterling is continuing its rally from yesterday after British Prime Minister Theresa May announced a snap election. The U.K. currency moved higher throughout yesterday, hitting a seven-month high against it trading peers. Two main reasons for the one-day record jump: 1. By calling a snap election, May is hoping for a better mandate to negotiate deals with the European Union, which is a positive for the U.K. economy in the long run. Current polls have her Conservative Party ahead by 21 percentage points. 2. A short squeeze is occurring now that sentiment has taken a turn for the better and traders are closing their short positions. This may be an overreaction, so investors are urged to beware of a correction. The pound is currently trading at $1.7255.

Traders expect a range today of $1.7179 to $1.7283

The Australian dollar is taking a dive today as iron ore prices continues to slide. Iron ore prices has already dropped 16% this month as the commodity hit a six-month low. There’s no domestic data risk for the rest of the week until consumer price index data is released next Tuesday night at 9:30 pm EDT.

Oil (WTI): $52.46 U.S. per barrel

Gold: $1,282.74 U.S. per ounce

Silver: $18.23 U.S. per ounce

Copper: $2.5478 U.S. per tonne

Dollar Index: 99.67

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