- BoJ intervenes to buy JGB’s and sinks JPY
- European equity indexes rise, S&P and DJIA futures flat
- US dollar opens higher, AUD and CAD outperform
FX at a Glance 24 hours
Source: IFXA Ltd/RP
USDCAD Snapshot: open 1.2481-85, overnight range-1.2476-1.2502, close 1.2477
USDCAD consolidated losses from Friday. Prices are weighed down by fears the BoC may adopt a more aggressive hike policy after remarks from Bank of Canada Deputy Governor Sharon Kozicki. She said that inflation was far higher than expected and that the BoC is “prepared to act forcefully.” Her comments suggest the Fed will not be alone in hiking rates 0.50%.
WTI oil prices slumped but are well-above the $100.00/b level. The prospect of an Iran Nuclear deal would mitigate but not alleviate a crude shortage from the loss of Russian oil. In addition, Opec continues to side with Russia and has no plans to increase production.
USDCAD technical outlook
The USDCAD technicals are bearish while below 1.2570, looking for a test of support in the 1.2420-1.2440 area to extend losses to 1.2280. A break above 1.2520 today, would target 1.2570 but leave the downtrend intact.
For today, USDCAD support is at 1.2460 and 1.2420. Resistance is at 1.2520 and 1.2570. Today’s Range 1.2480-1.2570
Chart: USDCAD 4 hour
Source: Saxo Bank
G-10 FX recap and outlook
On Saturday, President Biden said about Vladimir Putin, “For Gods Sakes, this man cannot remain in power,” which sounded like the US and NATO would get involved in the Russia/Ukraine war. The White House spin doctors quickly rushed to remove the President’s left foot from his mouth. They told whoever would listen that what Biden said was not what he meant, and the US did not have a policy of regime change in Russia. Putin’s views on regime change in the US are unknown.
Will Smith’s views on a Chris Rock joke at the Oscars did not need any clarification. He clocked him. Viewers are wondering how Mr Smith would have reacted if the other Rock had made the joke, as Dwayne Johnson was in attendance.
European bourses ignored Russia/Ukraine concerns. The German Dax is up 1.72%, leading the other indexes higher. and a 1.62% gain in the German Dax leads the major indexes higher. Wall Street futures are unchanged. Gold prices are lower on reports that Putin and Zelenskyy will meet in Turkey. WTI oil lost over 5.0% due to concerns about a COVID outbreak in Shanghai.
The US 10-year Treasury yield touched 2.555% overnight but has retreated to 2.4454% in NY
EURUSD see-sawed in a 1.0946-1.0999 range with prices weighed down by fears the US will hike rates more aggressively than anticipated. There were no top-tier economic reports, leaving widening US/ECB interest rate differentials to drive direction. S&P Global cut its EU growth rate forecast to 3.35% from 4.4% due to higher prices from the Russia/Ukraine war.
GBPUSD bounced around in a 1.3098-1.3183 band. Prices tested the bottom after Bank of England Governor Andrew Baily warned, “Liquidity conditions have deteriorated in many commodity markets, margining costs have risen, which is of course a reflection of much higher volatility and risks in these markets. We can’t take resilience in particularly that part of the market for granted.
USDJPY was a big mover climbing from 122.01 to 125.10. T he rally occurred after the Bank of Japan intervened in the bond market to cap 10-year JPB yields at 0.25%. The BoJ offered to buy an unlimited amount of JGB’s but didn’t find any takers.
AUDUSD and NZDUSD traded with broad US dollar sentiment and both currency pairs are below session lows in NY trading.
The US and Canadian data calendars are empty.
Chart of the day- USDJPY 5 minute
Source: Saxo Bank
FX open, high, low, previous close as of 6:00 am ET
Chart: Saxo Bank
Today’s Bank of China Fix 6.3732, previous 6.3739
Shanghai Shenzhen CSI 300 fell 0.63% to 4,148.47
Shanghai (population 26.32 million) announces two-stage lockdown to combat COVI outbreak. Public transit shuttered while companies must close operations or work from home.
Chart: China 1 month
Source: Saxo Bank