- US equity futures attempting to recoup Asia losses
- Western sanctions take big bite out of Russian rouble
- US dollar rallies in Asia and retreats in Europe
USDCAD Snapshot: open 1.2737-41, overnight range-1.2724-1.2808, close 1.2702, WTI open $95.62, Gold open $1905.85
The Canadian dollar is on a geopolitical roller-coaster but despite all the ups and downs, the currency pair remains locked in its well-defined range.
North American markets closed Friday with a mild risk-seeking bias. The S&P 500 and Dow Jones Industrial Average closed the week on an “up” note, and the major G-10 currencies were grinding out gains. Traders decided the reaction to the Russian invasion of Ukraine was overdone as it was just a regional issue.
Weekend developments changed that outlook and Asia markets opened sharply risk-averse.
Russian President Vladimir Putin, perhaps frustrated with his army’s slow progress into Ukraine, and tired of hostile rhetoric and sanctions by Western governments, said he placed his “nuclear deterrent” forces on high alert.
Traders just heard “nuclear”, and markets gapped lower at the Asian open. The S&P 500 plummeted from to 4259 after closing at 4384.65 Friday. Gold prices jumped to $1928.23 from $1889.07 and the US 10-YEAR Treasury yield dropped to 1.889% from 1.978%. However, prices are well above their worst levels in early NY trading.
The Canadian dollar reacted to safe-haven demand for US dollars while traders ignored a jump in oil prices. West Texas Intermediate closed at $91.95/barrel Friday and spiked to $98.98/b in Asia, while USDCAD climbed to 1.2807 from 1.2702.
WTI is underpinned by speculation that Western governments may increase pressure on Russia by banning imports of Russian energy. However, that will not be an easy decision as Russia is responsible for 40% of Europe’s gas supplies.
EURUSD gapped lower at the Asia open, falling from Friday’s close of 1.1272 to 1.1124 but has managed to recoup more than half of the losses and trades at 1.1218 in NY. T
GBPUSD plunged from Friday’s close of 1.3416 to 1.3313 in early Asia trading, but the move was fully reversed in early NY hours supported by EURGBP selling.
USDJPY traded in a 114.92-115.77 range and is just below the top of that band in NY trading.
AUDUSD and NZDUSD recovered all their Asia losses partly because of higher commodity prices.
The Chicago Purchasing Managers and Dallas Fed Manufacturing Business indexes are due.
