Source: IFXA Ltd/RP

USDCAD Snapshot: open 1.2833-37, overnight range 1.2780-1.2846, previous close 1.2826

USDCAD accelerated higher yesterday, caught up in a wave of negative risk sentiment, then consolidated the gains overnight.  The catalyst were comments from Russia Foreign Minister Sergey Lavrov warning the West that supplying military aid to Ukraine risks World War III. Stocks sank and the US dollar soared on safe-haven demand.

Russia stirred the pot again overnight. They halted gas sales to Poland and Bulgaria because those countries refused to pay in rubles. EU President Ursula von der Leyen spewed outrage at Russia’s actions, even as Germany, France and other EU countries, wallow in Russian crude.

The news helped oil traders shrug off the API report that US crude inventories surged 4.8 million barrels in the week ending April 22.  WTI jumped to $102.96/barrel from yesterday’s low of $97.15/b.

Canadian traders struggle to make sense of some major Canadian bank economic insight.  One leading bank’s commentary today is headlined “Low income Canadians to feel sharpest sting from inflation, rate hikes.” Doh! That’s as helpful as announcing “you will get wet if you fall into a lake.”

Bank of Canada Governor Tiff Macklem repeats his House testimony to the Senate, today.

USDCAD technical outlook  

The USDCAD technicals are bullish. The break above 1.2650 then 1.2740, leaves steep uptrend from last Thursday above 1.2780.  Th recent gains landed USDCAD into a long-term resistance zone between 1.2800-1.3030, representing previous tops and the 38.2% Fibonacci retracement of the 2020-2021 range.

For today, USDCAD support is at 1.2770 and 1.2710.  Resistance is at 1.2870 and 1.2910.  Today’s Range 1.2770-1.2870

Chart: USDCAD daily

Source: Saxo Bank

G-10 FX recap and outlook

Poland and Bulgaria are looking for Luke Skywalker or a reasonable facsimile to counter the evil Vlad Vader.  Chinese authorities are looking for an economic rebound, and are willing to spend billions while simultaneously hoping to avoid a Shanghai-style lockdown to fight Covid.  Wall Street is crossing its fingers, hoping for support from earnings reports, including Meta.  And everyone else is wasting away in Margaritaville.

Asian stock traders took their cue from Wall Street and dumped stocks.  Japan’s Nikkei 225 lost 1.17%, while Australia’s ASX 200 fell 0.78%.

China’s CSI 300 jumped 2.94% on stimulus talk.  European bourses started slowly but found their footing and are trading with gains, led by a 0.86% rise in the French CAC index.  S&P500 futures attracted dip buyers but are off their best levels.  Oil prices are higher while gold prices are down.  The US 10-year Treasury yield is unchanged at 2.736% (5:45 am PDT).

EURUSD continued to slide, falling from 1.0654 to 1.0587 in Europe before grinding back to 1.0610 in NY trading.  The single currency suffers from energy supply concerns due to Russia’s actions raising fears of a recession.  ECB President Christine Lagarde is speaking around 12:00 EDT.  The EURUSD technicals are bearish below 1.0650.

GBPUSD dropped to 1.2538 from 1.2601, then clawed back some losses on the back of rising UK stock prices.  The currency is a victim of safe-haven demand for US dollars, in addition to the recent spate of weak data stoking recession fears.  GBPUSD technicals are bearish below 1.2750 with a break below 1.2500 targeting 1.2350.

USDJPY dropped to 126.96 in early Asia due to falling US Treasury yields and safe-haven demand.  Prices climbed steadily until peaking at 128.18 in early NY.

AUDUSD bottomed out at 0.7121 in Asia then prices rallied to 0.7189 just before Europe opened due to surging inflation.  Q1 CPI rose 5.1% y/y leading banks like JP Morgan and SocGen predicting the RBA would hike rates at next week’s meeting.

Chart: US Dollar Index

Source: Saxo Bank

FX open, high, low, previous close as of 6:00 am ET

Chart: Saxo Bank

China Snapshot

Today’s Bank of China Fix 6.5598 (Previous Fix 6.5590)

Shanghai Shenzhen CSI 300 rose 2.94% to 3,895.54

Chinese President Xi Jinping promises another “stimulus” package.  He wants to boost growth by spending on infrastructure, which includes airports, highways, and water projects.

Chart: China 1 month

Source: Yahoo Finance