- Canadian dollar best performing G-10 currency since yesterday
- Global risk sentiment improves as stock markets rally
- US dollar opens on mixed note, JPY underperforms
USDCAD Snapshot: open 1.2924-28, overnight range 1.2908-1.2984. close 1.2981, WTI open $110.59, Gold open $1,837.20
The Canadian dollar is clawing back losses due to an improved global risk environment. USDCAD made a decent attempt to drive through resistance in the 1.3050-70 area on Friday, but the level held. Prices slid steadily Monday and continued overnight.
The Canadian dollar gains were a by-product of rebounding stock markets, particularly the S&P 500 index The index closed Friday at 3675.00 and the futures market has lifted prices to 3730.00 today.
The Canadian dollar also saw a bit of support when WTI oil prices found a floor at $106.20, after dropping from $123.60/barrel last Tuesday.
Canada Retail Sales are expected to haven risen 0.8% in April. The data is unlikely to have any impact on FX trading as it is stale, and the Bank of Canada is focused on inflation.
The US returns from a long weekend, and that helped put Asian equity traders in a good mood. Japan’s Nikkei 225 index rose 1.87% leading the other indices higher. European traders followed Asia’s lead and the major indexes are in positive territory. DJIA and SP500 futures suggest a positive open on Wall Street.
The US 10-year Treasury yield ticked up to 3.29% in early NY trading which has served to cap equity gains.
EURUSD rallied from 1.0510-1.0582 with traders getting over French politics while ignoring Russian/Ukraine war headlines for today. The gains are mostly due to higher stock prices, particularly the S&P 500. ECB policymaker Ollie Rehn said inflation pressures are broader and higher and suggested a September rate hike could exceed 0.25%. Yesterday President Christine Lagarde promised to combat Eurozone bond stress. The EURUSD intraday technicals are bullish above 1.0500.
GBPUSD rallied from 1.2244 to 1.2323 before sliding to 1.2275 in NY. BoE Chief Economist Huw Pill said more monetary policy tightening is needed and would allow growth to weaken in order to get inflation down to 2.05. A weaker economy may occur even without higher interest rates as many other unions and trade groups are poised for strike action alongside railway workers.
USDJPY rallied again, climbing from 134.94 to 135.96 due to divergent Fed and BoJ interest rate policies.
AUDUSD and NZDUSD gave up early gains. AUDUSD rallied to 0.6986 in Asia before dropping to 0.6942 in NY while NZDUSD is at the bottom of its 0.6324-0.6362 range.
US existing home sales data is ahead.
