- Oil price volatility driving market direction
- US February CPI data due today
- The US dollar recouped Asian losses in Europe.
USDCAD open: 1.3573, overnight range 1.3555-1.3586, close 1.3579, WTI 88.47, Gold 5187.66
The Canadian dollar traded in a narrow and largely uneventful range overnight, remaining confined within familiar territory.
Meanwhile, Carney’s government appears to be edging closer to securing a parliamentary majority. A Nunavut NDP MP has decided that her political prospects and re-election chances are better served under the Liberal banner.
WTI oil traded in a 81.82-88.91 range with the low seen in Asia. Prices have since eased from the peak to 86.51 in NY. The International Energy Agency (IEA) has floated a proposal to release 400 million barrels of crude from strategic reserves. The plan could face delays because the IEA’s 32 member countries must agree to the move, and a single objection would stall the release. French President Macron is hosting a video conference today with other G-7 leaders to discuss the oil market response.
Asian equities moved higher as crude prices softened. Japan’s Topix advanced 0.94% and Australia’s ASX 200 gained 0.50%, although Hong Kong’s Hang Seng slipped 0.24%.
At 7:20 am, European markets were in negative territory. Germany’s DAX has fallen 0.85%, the French CAC 40 is down 0.33%, and the UK FTSE 100 has declined 0.53%. Meanwhile, S&P 500 futures are modestly firmer, rising 0.13% and the US 10-year Treasury yield is 4.17%.
EURUSD traded in a 1.1590–1.1646 range with the session high recorded during Asian trading. The subsequent retreat occurred as oil prices strengthened. Volatility in crude markets has overshadowed incoming economic reports, and traders largely ignored Germany’s February retail sales data (CPI 0.2% m/m, unchanged).
GBPUSD drifted in a 1.3403–1.3458 range and was near 1.3435 in early New York dealings. Rising oil prices have pushed UK gilt yields higher amid concerns about renewed inflation pressures. Those moves have lifted expectations for Bank of England tightening, with markets now pricing roughly a 100% probability of a rate hike by September and about an 80% chance as early as July.
USDJPY climbed in a 157.87–158.49 range with a firm tone. Japan’s heavy reliance on imported energy means higher crude prices tend to weigh on the yen. The surge in oil prices, combined with the uncertainty surrounding supply disruptions, has overshadowed the currency’s usual safe-haven appeal.
AUDUSD traded between 0.7112 and 0.7176 overnight but has retreated from its highs as broad US dollar demand returned. Economists surveyed ahead of next week’s Reserve Bank of Australia meeting widely expect a 25 bp rate increase, which would lift the policy rate to 4.10% on March 17.
The only economic release of significance today is US CPI, which is widely expected to remain unchanged.
