USD/CAD Open: 1.2706-10, Overnight Range: 1.2697-1.2769, Previous Close: 1.2770
WTI Oil is at $92.00 and gold is at $1,909.10. US markets are lower today.
For today, USD resistance is at 1.2731. Support is at 1.2704.
The Canadian dollar is enjoying a modest “relief rally” albeit in the confines of the USDCAD 1.2640-1.2790 range that has contained price movements for the past three weeks.
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Global risk sentiment turned positive after President Biden imposed another round of sanctions that didn’t live up to its advanced billing. The US sanctioned two large Russian banks and a trio of Putin allies.
Bonds fell as safe-haven trades were reversed, boosting the 10-year Treasury yield to 1.98%. Equity traders bought stocks and Asia markets rallied except those in Japan which were closed for a national holiday.
European traders followed suit and the major bourses are posting gains. S&P 500 and DJIA futures are pointing to a positive start on Wall Street.
West Texas Intermediate (WTI) fell over 5.0% since yesterday but remains well above $90.00/b due to the belief that prices still have a lot of upside from rising global demand, and Russia sanctions. The Canadian dollar shrugged off the decline.
EURUSD traded choppily in a 1.1317-1.1358 range. Prices were supported by yesterday’s somewhat hawkish comments from a couple of ECB policymakers suggesting rising inflation would mean interest rates would have to rise. Eurozone HICP inflation was 5.1% y/y in January while core inflation was 2.3%. However, gains are capped due to the ongoing Russia Ukraine crisis. The EU is expected to announce a string of sanctions against Russia later today.
GBPUSD dropped from an overnight peak of 1.3619 to 1.3584 in NY despite a somewhat hawkish outlook from Bank of England Governor Andrew Bailey. Mr. Bailey said there were upside risks to inflation and there was a possibility that higher inflation becomes embedded.
USDJPY traded in a narrow 115.00-115.11 band, in part because Japan was closed for the Emperor’s Birthday. Prices were supported by some unwinding of safe-haven trades and by firmer US Treasury yields.
The New Zealand dollar was the best performing major G-10 currency overnight. NZDUSD rallied from 0.6735 to 0.6798 after the RBNZ raised the OCR rate 0.25% to 1.0% and increased the interest rate outlook to 3.25% by the end of 2023 from the 2.75% November forecast. The rate hike was widely expected, however, the hawkish outlook by Governor Adrian Orr was not. Mr. Orr warned that the OCR could be increased by higher increments going forward as inflation is well-above its targeted range.
There are not any US economic reports of note today.
Today’s Suggested Range USD/CAD: 1.2660 – 1.2760
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