- Month-end and quarter-end flows boost Canadian dollar
- Risk sentiment sours on Russian troop withdrawal scepticism
- US dollar opens with losses, NZD the exception
USDCAD Snapshot: open 1.2482-86, overnight range-1.2478-1.2507, close 1.2503, WTI open $106.61, Gold open $1,921.04
The Canadian dollar is sitting near the top of its recent range, supported by month-end and quarter-end rebalancing flows driving broad US dollar weakness.
The S&P 500 index closed at 4373.94 on February 28. Since then, it has gained 5.8%, which suggests portfolio managers will need to buy Canadian dollars to maintain their benchmarks.
The Canadian dollar is garnering some support from steady to firm West Texas Intermediate (WTI) oil prices, are trading at $106.70 in NY. Prices got a lift after the weekly American Petroleum Institute crude stocks data showed inventories declined 3.0 million barrels in the week ending March 23.
The Russia/Ukraine war is exacerbating crude supply/ demand imbalances further while Opec refuses (or is unable) to increase production substantially.
European equity indexes are in negative territory, partly because of disappointment around the Russia/Ukraine peace talks. Positive sentiment from reports Russia agreed to withdraw some troops yesterday soured after the US Department of Defense said Russia wasn’t withdrawing but just repositioning. Russian spokesperson Dimitri Peskov said there were no major “breakthroughs” in the talks.
EURUSD traded with a bit of a bid, rising from 1.1085 to 1.1161 due to both month-end flows and hawkish comments from ECB officials. Policymaker Madis Muller said that unless the Russia/Ukraine war escalated dramatically, the first rate hike would occur by the end of the year.
Euro-area data was a tad better than expected but weaker than the previous month. The EU bulletin said “The EU bulletin said, “In March 2022, the Economic Sentiment Indicator (ESI) dropped substantially in both the EU (-5.3 points to 107.5) and the euro area (-5.4 points to 108.5), mainly due to plummeting consumer confidence. After reaching record-high levels in February, business managers’ Employment Expectations Indicator (EEI) also eased (-1.1 points to 114.9 in the EU and -0.9 points to 115.5 in the euro area).
GBPUSD climbed from 1.3090 to 1.3160 despite rather negative comments from BoE Deputy Governor Ben Broadbent. He warned that the rise in energy and other commodity prices was the biggest hit to national income ever, suggesting it would result in weak growth and higher inflation.
USDJPY retreated from 123.20 to 121.32 due to softer Treasury yields and Japanese fiscal year-end flows.
The US economic data will be ignored.
