- WTI falls 3.0%, dragging Loonie lower.
- Fed expected to hike rates 25 bps and hint at a pause.
- US dollar on the defensive, CAD and AUD underperform.
USDCAD snapshot: open 1.3621-25, overnight range 1.3605-1.3630, close 1.3626, WTI $70.14, Gold $2017.18
The Canadian dollar came under pressure yesterday and continued to slide overnight.
A weaker than expected JOLTS Job openings report started the slide. The Bureau of Labor Statistics (BLS) said job openings fell by 384,000 which was more than expected and seen as evidence that the 4.50 bps of Fed rate hikes since a year ago March, were finally taking a toll on the economy.
The results reinforced recession fears which empowered gold traders to drive gold prices from $1979.00 to $2017.18 overnight.
West Texas Intermediate oil extended the slide that began April 13 when prices peaked at $83.40 and dropped to $69,25/ b overnight.
EURUSD extended Tuesday’s gains rising from 1.0999 at Tuesday’s close to 1.1046 in NY today. The single currency is benefiting from the belief the Fed will hint at a pause to rate hiking after today’s expected 25 bp rate increase. The ECB is expected to raise its benchmark rate by 25 bps tomorrow and suggest further hikes are coming down the pipe.
GBPUSD rose from 1.2469 to 1.2532, powered by broad US dollar weakness with a lack of domestic data forcing traders to follow EURUSD moves. The intraday GBPUSD technicals turned bullish with the move above 1.2505 this morning, although the longer term 1.2440-1.2580 band continues to contain prices.
USDJPY gave back all this weeks gains, falling from 137.69 yesterday to 135.54 in early NY trading today. The reversal occurred after US regional bank shares fell sharply which spurred a rush into safe-haven assets, including yen and Treasuries. The US 10-year Treasury yield dropped from 3.60% on Monday to 3.397% in NY today. Liquidity was poor as Japan is on a three-day holiday.
AUDUSD traded narrowly in a 0.6656-0.6676 range and traders ignored trade and manufacturing PMI data.
NZDUSD rallied in from 0.6207 to 0.6248 in Asia then retreated to 0.6224 in Europe. The gain occurred following a strong employment report (unemployment rate unchanged at 3.4%), which suggested the RBNZ will raise rates again, on May 24.
The ISM Services PMI and ADP employment reports are due.
