- ECB President turns hawkish, boosting EURUSD
- Markets are choppy as risk sentiment does flips
- US dollar opens lower against G-10 compared to Friday-CAD lags
USDCAD Snapshot: open 1.2800-04, range including Monday 1.2768-1.2840, Friday close 1.2839, Monday close 1.2771, WTI open $109.97, Gold open $1,857.25
The Canadian dollar traded firmer Monday then consolidated the gains overnight. The ebbs and flows of global risk sentiment dictated price action.
The EUR is the best performing major G-10 currency since Friday’s NY open, rising 1.14%. That rally undermined broad US dollar sentiment ang the greenback fell across the board.
European Central Bank President Christine Lagarde sparked the EURUSD rally when she predicted a July rate hike, the first since 2010). Her hawkish comments were posted on her blog. She wrote that “net purchases under the APP (Asset Purchase Program) would end early in the third quarter. This would allow us a rate lift-off at our meeting in July.
EURUSD soared, rising from 1.0562 at Friday’s close to 1.0735 just before NY opened today.
Ms Lagarde claims that a rate hike would not constitute a tightening of monetary policy, but instead said “leaving policy rate unchanged in this environment would constitute an easing of policy which is not currently warranted.”
The surging EUR undermined the US dollar against the other G-10 majors.
The Canadian dollar got some added support from steady to firm oil prices. West Texas Intermediate traded in a $108.63-$110.83/barrel range. Prices are supported by reports that the European Union are planning a complete embargo of Russian oil, whether Hungary agrees or not.
President Joe Biden caused a bit of turmoil during his Asia visit. He went “off-script” when he said the US military would defend Taiwan. He was supposed to just stick to the “strategic ambiguity” stance which has been the mainstay of the State Department diplomacy, for decades.
Feeling were assuaged on reports that the US is considering removing or reducing some tariffs on Chinese imports.
GBPUSD traded in a 1.2477-1.2597 range. Weaker than expected UK Manufacturing and Services PMI reports drove prices to session lows.
USDJPY traded with a negative bias in a 127.09-128.08 range due to the soft US 10-year Treasury yield, which is at 2.82%.
NZDUSD is near the bottom of its Monday-Tuesday range of 0.6425-0.6485 with traders awaiting the RBNZ decision on Tuesday. The RBNZ is expected to raise its Overnight Cash Rate (OCR) to 2.0%, a 0.50% increase.
US New Home Sales data and Fed Chair Powell’s speech are ahead.
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