- Traders await Fed chair Powell speech today
- Oil prices search on Russia oil embargo talk
- US dollar opens slightly weaker compared to Friday’s open
USDCAD Snapshot: open 1.2607-11, overnight range-1.2592-1.2620, close 1.2604, WTI open $108.54, Gold open $1,925.34
The Canadian dollar traded sideways in an uneventful overnight session.
It was a slow start to the week in Asia, with Japan closed for Vernal Equinox Day and the ongoing Russian invasion of Ukraine keeping traders on their toes.
Friday’s telephone call between China President Xi Jinping and US President Joe Biden didn’t spark any financial fireworks. Biden reportedly warned of “consequences” if China supported Russia while Jinping expressed concern about US support for Taiwan.
Some EU officials advocate a Russian oil embargo while others say they can’t cut themselves off Russian supplies at such short notice. Talk of an EU embargo underpinned West Texas Intermediate (WTI) prices, as did reports of Yemen Houthis attacking a Saudi oil facility. WTI climbed from $104.98 at Friday’s close to $109.73/b in Europe before easing to $108.60 in NY.
Canadian dollar support from the higher oil prices was minimal but nevertheless helped the currency outperform against the other commodity currencies, AUD and NZD.
European equity indexes are modestly higher, led by a 0.75% gain in the UK FTSE 100 index. The German Dax index is up 0.19%. S&P 500 and DJIA futures point to a flat opening on Wall Street. WTI oil rose 2.9% while gold prices dipped 0.15%. The US 10-year Treasury yield is firmer at 2.197%.
Fed Chair Jerome Powell delivers an Economic Outlook today at noon. Mr Powell is unlikely to offer any fresh insight as nothing has changed since last Wednesday's FOMC meeting.
The Canadian dollar continues to flirt with strong resistance supported by the bounce in the S&P 500 index and higher oil prices. However, domestic issues may derail the rally. CP rail workers went on strike Saturday, and a prolonged work stoppage may exacerbate domestic supply chain issues and lead to higher inflation and slowing economic growth.
EURUSD attempted to rally in Asia, but the rally stalled, and it dropped to 1.1026 from 1.1074. Traders ignored hawkish comments from some ECB officials advocating higher interest rates, while the ongoing Russia/Ukraine war weighed on prices.
GBPUSD traded defensively in a 1.3128-1.3174 range with caution ahead of Powell’s speech and the dovish Bank of England rate hike capping gains.
USDJPY continued to climb, rising from 119.11 to 119.30, supported by the US 10-year Treasury yield probing the 2.20% level.
There are no meaningful US or Canadian economic reports today.
