- Most markets closed for Easter Monday
- US Treasury Yields extend gains
- CAD outperforms vs commodity bloc, US dollar bid
USDCAD Snapshot: open 1.2635-39, Apr 15-18 range 1.2591-1.2642, Apr. 14 close 1.2603, WTI open $106.64, Gold open $1,992.64
The Canadian dollar started sliding Thursday and continued to do so in early New York trading today. It wasn’t alone. A wave of broad US dollar demand stemming from another jump in US Treasury yields drove the major G-10 currencies lower.
Global markets are fixated on global economic risks from Russia’s invasion of Ukraine and from fears US interest rate may rise higher and faster than expected. Those fears drove Wall Street stocks down on Thursday while lighting a fire under US Treasury yields.
The Dow Jones Industrial Average closed 0.33% lower while the S&P 500 lost 1.21%. DJIA and SP futures have bounced off their worst levels in early NY trading but that rally stalled after Bank of America reported that its Q1 profit fell 12%.
US 10-year Treasury yields jumped to 2.884% from 2.664% on Thursday after hawkish comments from NY Fed President John Williams. Mr Williams is one of the more dovish FOMC members, so markets reacted when he said that a 0.50% rate hike was a “reasonable option.”
His comments carried more weight in the wake of the European Central Bank (ECB) monetary policy meeting. The ECB left rates unchanged and comments from President Christine Lagarde downgraded the possibility of a rate hike in July. Ms Lagarde acknowledged upside risks to inflation but seemed more concerned with slowing growth due to supply chain disruptions, the energy price shock, and the war in Ukraine.
EURUSD plunged following the ECB meeting Thursday and then consolidate the losses in a 1.0784-1.0830 between Friday and Monday. EURUSD technicals are bearish with the break below 1.0800 risking further losses to 1.0500.
GBPUSD traded with a negative bias, falling from 1.3076 on Friday to 1.3008 today.
USDJPY rallied to 126.78 from 125.20 Thursday morning, coinciding with the sharp jump in US 10-year Treasury yields.
AUDUSD and NZDUSD markets were closed but both currency pairs retreated in the face of broad US dollar demand. The minutes from the RBA meeting of the April 5 meeting are due tomorrow.
There are no US or Canadian economic reports of note today.
