- Traders looking for direction from US data.
- US 10-Treasury yield slides to 3.445%
- US dollar trading with a mixed bias as CAD underperforms.
USDCAD snapshot: open 1.3571-75, overnight range 1.3527-1.3599, close 1.3541, WTI $78.49, Gold $1987.99
The Canadian dollar extended yesterday’s slide overnight against a backdrop of uncertainty ahead of next Tuesday’s FOMC meeting, falling Treasury yields, and fresh US banking concerns.
USDCAD broke above resistance in the 1.3560 area and the short-term technicals suggest further gains to 1.3660 are in the cards.
The Canadian dollar weakness is partially due to concerns that the ongoing strike by 155,000 public sector employees will exacerbate weak growth in Q1. A key sticking point is that employees want the right to work from home rather than going to the office two or three days per week.
EURUSD traded in a 1.1026-1.1066 range. The single currency is consolidating the gains from yesterday which occurred after ECB Governing council member Isabel Schnabel said, "Data dependence means that 50 basis points are not off the table."
Her colleague, Chief Economist Phillip Lane, “The current data are indicating that we should raise rates again” next week.”
The hawkish ECB comments helped narrow the interest rate differentials between Europe and the US, which also fueled EURUSD gains.
GBPUSD mirrored EURUSD moves and traded in a 1.2457-1.2506 band overnight. The prospect of a 25 bp rate hike by the BoE next month is fully priced in, leaving GBPUSD direction at the whim of broad US dollar sentiment.
USDJPY rallied then sank in a 133.83-134.47 range due to falling US Treasury yield and dovish comments by BoJ Governor Kazuo Ueda. The governor said it was too early to ease monetary policy and that the YCC policy was appropriate.
Asian FX liquidity was lighter than usual as Australia and New Zealand were closed for Anzac Day.
AUDUSD traded negatively in a 0.6654-0.6704 range ahead of tomorrow’s inflation report. CPI is expected to fall to 1.3% from 1.9% which could mean the RBA will leave interest rates unchanged at the May 2 monetary policy meeting.
Today’s US data includes Case-Shiller Home Price Index, and Consumer Confidence.
