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USD / CAD - Canadian dollar in a rut

- Global markets are mildly risk positive.

- BoC Governor Tiff Macklem House of Commons testimony today

- US recoups opens mixed; JPY lags, AUD outperforms.

USDCAD snapshot open 1.3383-87, overnight range 1.3360-1.3406, close 1.3394, WTI $78.60, Gold $1838.32

The Canadian dollar tis in a rut. It cannot sustain traction in any direction as traders ignore domestic data in favour of the US interest rate outlook. That outlook is muddled as well.

Traders are mildly risk positive due to the US 10-year Treasury yield remaining steady around the 3.80% level despite robust US economic data supporting additional Fed rate hikes. They believe that even if the Fed raises rates, they will soon be pausing, and the economy is resilient enough to avoid falling into a recession.

USDCAD dropped to 1.3335 yesterday then rallied to 1.3442 in the wake of US Retail Sales rising 3.0% m/m in January compared to the consensus forecast of a 1.8% increase.

The news also lifted the US 10-year Treasury yield from 3.76% to 3.81% where it stalled. The failure to rise even further gave Wall Street the incentive to buy stocks and the S&P 500 index closed with a 0.26% gain.

Asian equity indexes followed the Wall Street lead and closed with gains. European stock traders are risk positive and the major European indexes are higher. However, S&P500 futures are slightly lower ahead of today’s US economic releases.

Weekly jobless claims are expected to rise 10,000 to 200,000, while the Producer Price Index is expected to drop to 5.4% y/y from 6.2% in December. Other data includes the Philadelphia Fed Manufacturing Survey (forecast -7.4 vs previous -8.9, Building Permits (forecast 0.8% vs -1.0% in December, and Housing Starts (forecast 0.6% vs previous -1.4%).

EURUSD chopped about in a 1.0686-1.0722 range. Traders ignored comments from ECB President Christine Lagarde reiterating that the central bank would hike rates by 50 bps in March.

GBPUSD drifted higher overnight, rising from 1.2016 to 1.2073 before retreating to 1.2050 in NY. Price action is tracking broad US dollar moves.

USDJPY traded in a 133.61-134.16 range with prices supported by the bounce in the US 10 -year Treasury yield to 3.80% from 3.72% at the beginning of the week.

AUDUSD dropped from 0.6903 at Wednesday’s NY close to 0.6869 following a weaker than expected Australian employment report. Australia lost 11,500 jobs in January (forecast +20,000) and the unemployment rate rose to 3.7% from 3.5%. The report was quickly forgotten as global risk sentiment improved and AUDUSD rallied to 0.6935.