- JOLTS job openings surprise raises odds the Fed leaves rates unchanged.
- RBNZ surprises with a 50 bp rate hike
- US dollar opens mixed, CAD and AUD underperform.
USDCAD snapshot: open 1.3473-77, overnight range 1.3428-1.3482, close 1.3444, WTI $80.41, Gold $2024.79
The Canadian dollar is on the defensive this morning after global markets turned cautious ahead of the Easter weekend and Friday’s US employment report.
USDCAD failed to break below support in the 1.3380-1.3410 area yesterday in the wake of the surprise 1.0 million/barrel per day Opec production cut. The news sent West Texas Intermediate prices soaring and knocked USDCAD lower.
However, the Opec action is a double-edged sword. On one hand, higher prices for crude mean a higher Canadian dollar. But higher oil prices are also inflationary and suggest lower global growth.
WTI gains stalled ahead of major resistance due to concerns that higher prices will choke off demand and exacerbate recession risks in the USA.
The Canadian dollar was also sideswiped by yesterdays weaker than expected US Job Openings and Labor Turnover Survey (JOLTS). The number of job vacancies fell by 630,000 in February dropping the number of available positions to 9.93 million. The Fed keeps a close eye on this report because the tight labour market is a contributing factor to higher inflation.
Yesterday’s lower than expected results had analysts scurrying to lower their Fed rate hike outlook. The US 10-year Treasury yield dropped to 3.335% from 3.485% and the odds that the Fed will leave rates unchanged on May 3 are now 53%.
Gold traders reacted to lower Fed rate expectations by driving the precious metal from $1950.06 on Monday to $2028.16 today.
EURUSD drifted in a 1.0942-1.0969 band and ignored German factory orders and Eurozone Composite and Services PMI data.
GBPUSD traded negatively overnight, falling from 1.2513 to 1.2457 due to profit-taking following Tuesdays rally while awaiting today’s US data. Prices remain supported by the belief that UK growth will be stronger than previously expected.
USDJPY bounced in 131.24-131.83 range after falling from a peak of 133.16 on Tuesday. Prices were weighed down by the plunge in the US 10-year Treasury yield to 3.335% from 3.48% yesterday.
NZDUSD was the focus in Asia after the RBNZ hiked rates by 50 bp, rather than the 25 bp bump expected. NZDUSD spiked to 0.6379 from 0.6306 to but gave back all the gains by the time NY opened.
AUDUSD traded negatively in a 0.6681-0.6779 range with the decline exacerbated by AUDNZD selling. selling pressure.
Today’s US data includes Balance of Trade, ADP Employment Change, and ISM Services PMI.
