- Risk sentiment improves on China stimulus talk
- European stocks rally, US equity futures falter
- CAD outperforms as US dollar opens weaker
USDCAD Snapshot: open 1.2744-48, overnight range 1.2727-1.2811, previous close 1.2807, WTI open $106.68, Gold open $1,914.73
The Canadian dollar stepped back from the brink and rallied aggressively. The catalysts were surging oil prices, rising US equity markets, and news China plans another fiscal stimulus program.
USDCAD probed resistance in the 1.2870-80 area yesterday which if broken, would have accelerated gains. That didn’t happen. USDCAD slid, snapping a short term uptrend at 1.2820 , and then breaking support at 1.2770. Traders are looking at further USDCAD losses below 1.2720 to extend to 1.2670.
A stronger than expected February Canadian GDP report (forecast 0.8% m/m) would accelerate USDCAD losses and lead to a test of 1.2670 support.
Chinese officials said they will implement a series of measures to boost growth while supporting Covid -affected industries. They also said they were committed to achieving growth targets. The news rejuvenated global risk sentiment even though China’s zero-tolerance COVID policies risk derailing the economic recovery.
West Texas Intermediate jumped to $106.83/b overnight, 12% higher than it was on Monday. The rally is supported by the Chinese stimulus talks and by reports that Germany will phase-out Russian oil purchases.
Asia equity indexes closed higher with Australia’s ASX 200 gaining 1.06%. Hong Kong’s Hang Seng index jumped 4.01%., and the Shanghai Shenzhen CSI 300 index rose 2.43%. Japan was closed for a holiday.
European stock markets are in positive territory but well below their best levels while Wall Street Futures are weighed down by disappointing earnings from Amazon.
EURUSD traded sideways in Asia, then surged in Europe, rising from 1.0492 to 1.0592, before easing to 1.0552 in NY trading. Equity market gains, and Germany avoiding a recession after Q1 GDP grew at 0.2% q/q, supported gains. Euro area annual inflation ticked higher, rising to 7.5% y/y from 7.4% previously. The intraday day EURUSD technicals are mildly bullish above 1.0500, looking for a break above 1.0570 to extend gains.
GBPUSD tracked EURUSD higher, rising from 1.2454 to 1.2579. UK house prices rose 0.3% m/m in April, (forecast 0.8%).
USDJPY traded heavily, falling from 130.94 to 129.78 in a quiet market as Japan was closed for a holiday.
AUDUSD and NZDUSD rallied on the China stimulus news. AUDUSD got an added lift from higher than expected Producer Price data.
US PCE, Chicago PMI, and Michigan Consumer Confidence data are due.
