- CAD gains as WTI oil prices rebound.
- Fears of US banking crisis fade.
- US dollar trading defensively-opens on mixed note.
USDCAD snapshot open 1.3684-88, overnight range 1.3634-1.3694, close 1.3660, WTI $73.40, Gold $1953.78
The Canadian dollar is sliding thanks to rebounding oil prices, alongside mildly improved global risk sentiment.
USDCAD has support in the 1.3630 area, which if broken will extend losses to 1.3550. A failure to break support suggests another test of the 1.3760 resistance level.
West Texas Intermediate has recouped over 50% of its March losses with the latest jump due to a supply disruption. Turkey turned off the pump for Iraq crude to show its displeasure when it lost an arbitration hearing, which impacted 450,000 barrel/day.
WTI oil rose from $69.16/b on Monday to $3.49/b in Europe overnight. Oil prices are also underpinned by hopes of renewed demand from China. In addition, the option hedging flows that were reportedly behind the March price drop appear to have run their course, eliminating on source of selling pressure.
Asian equity indexes closed with gains led by a 1.11% rise in Hong Kong’s Hang Seng index.
The trend continued in Europe with European bourses posting small gains. S&P 500 futures are down 0.14% after giving back earlier gains.
The US 10-year Treasury yield is unchanged from yesterdays close of 3.547% while the 2-year Treasury yield sits at 4.01%.
EURUSD extended Monday’s gains and rose from 1.0797 to 1.0833. The gains were fueled by diverging US and European interest rate expectations. Traders believe the ECB will continue to hike rates while the Fed may pause and even cut rates by the summer. The intraday EURUSD technicals are bullish above 1.0710, looking for a break above 1.0840 to target 1.1000.
GBPUSD climbed on the back of the retreating US dollar, rising from 1.2283 to 1.2329, then eased back to 1.2310 in NY. BoE Governor Andrew Bailey’s comments did not provide any insight into monetary policy.
USDJPY continued yesterday’s slide overnight and dropped to 130.51 from 131.56 in the wake of the US 10-year Treasury yield climbing from its lows.
AUDUSD rallied from 0.6648 to 0.6694 before easing back to 0.6675 in NY. Retail sales were a tad better than expected but the gains were driven by improved risk sentiment.
US Consumer confidence data is expected to tick down to 101 from 102.
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