The USD/CAD snaps two days of losses and recovers some ground amidst a stronger US dollar, continuing hostilities between Russia and Ukraine, and lower oil prices. The Canadian dollar weakens vs. the greenback on the back of those factors but remains flat in the week. At the time of writing, the USD/CAD is trading at 1.2486.
Global equities keep trading in the red for the second straight day as Russia’s President Vladimir Putin signed a decree on natural gas, which has to be paid in Roubles and would begin on April 1. Furthermore, Putin’s added that proceedings in euros or US dollars could also be blocked while emphasizing that Russia will supply gas at agreed-upon volumes and prices. However, he reiterated that active contracts will be halted if demands are not met.
As a reaction to the headline, market sentiment turned sour, with the S&P heading lower, as market players turned towards the safe-haven US dollar.
Western Texas Intermediate (WTI), the US crude oil benchmark, fell from daily highs to the $102 mark on an announcement that the White House would tap its oil reserves and release 1 million BPD over six month period.
Macroeconomic-wise, the Canadian docket featured the GDP for January, which rose by 0.2%, in line with estimations, and higher than December’s 2021 reading. On the US front, the US central bank’s favorite gauge of inflation, the Core PCE for February, rose by 5.4% y/y, lower than the 5.5% estimated, while US Initial Jobless Claims for the week ending on March 26 increased by 202K, higher than the 197K expected.
The USD/CAD keeps trading downwards, as shown by the daily chart. Thursday’s price action reached a daily high at around 1.2533, but in the North American session, it gave back those gains and meandered around the 1.2480s highs. That said, the downtrend is intact unless the USD/CAD breaks above 1.2613, the 200-day moving average (DMA), and the top of the 1.2450-1.2600 range.
The USD/CAD first support would be March 25 daily low at 1.2465. A breach of the latter would expose January 12 low at 1.2447, followed by November 10, 2021, daily low at 1.2387.Full Article
In the quarter:
This is the second day of selling after a nice run-up since the start of March. I highlighted the seasonals in April yesterday.Full Article
The EUR/USD bottomed at 1.1067 after the beginning of the American session and then rebounded to the 1.1135 area as stocks trimmed losses in Wall Street. The greenback lost momentum as US yields remain near daily lows.
The euro is the worst G10 performer on Thursday, hit by a decline in German yields and concerns about rising inflation in the Eurozone. The CPI is due on Friday, and it could reach 7%.
In the US, data showed the Core PCE rose to 5.4% (year-over-year), Initial Jobless Claims rose modestly to 202K from the lowest since 1969, and the Chicago PMI rose from 56.3 to 62.9. The figures were mostly ignored by market participants. On Friday, the US official employment report is due. Marker consensus points to an increase in payroll of 490K and a drop in the unemployment rate from 3.8% to 3.7%.
US yields look steady on Thursday, hovering near recent lows. The 10-year yield stands at 2.32% and the 30-year at 2.45%. The Dow Jones drops 0.36%, and the Nasdaq loses 0.27%.
The correction of EUR/USD from the highest level in four weeks near 1.1200, alleviated the bullish pressure, but so far, it did not change the current positive outlook for the euro. The pair rebounded and managed to remain above the 20-Simple Moving Average in four hours chart (currently at 1.1080) and recovered 1.1100.
A firm break under 1.1080 would change the current bias to neutral. The immediate, relevant support might be seen at 1.1035/40. On the upside, the 1.1135 zone has become a critical resistance again. If the euro rises above a test of the weekly high at 1.1185 should not be ruled out.
Choppy conditions in global oil markets have continued during US trading hours, with prices continuing to trade with sharp on-the-day losses after the White House issued a statement confirming recent speculation regarding a historic crude oil reserve release. The White House said that it would be releasing 1M barrels of crude oil from the Strategic Petroleum Reserve (SPR) every day for the next six months and that it would then restock the SPR once prices are lower. Front-month WTI futures currently trade in the $102.00s, down slightly less than $5 on the day after earlier finding strong support in the $100 area.
Opposition politicians/commentators accused the White House of timing the release specifically to attempt to lower gas prices right before the November mid-term elections and, in doing so, jeopardizing long-term US energy security. Analysts at Goldman Sachs said the move would help the oil market rebalance in 2022, but was cautioned that it wasn’t a permanent fix and “would therefore not resolve the structural supply deficit, years in the making”.
The US SPR release aside, crude oil traders have also had plenty of other themes to monitor on Thursday. As expected, OPEC+ agreed on a 432K barrel per day (BPD) output quota hike from May, resisting continued calls from major oil-importing/consuming nations for the likes of Saudi Arabia and the UAE to lift output at a faster pace. Meanwhile, optimism regarding progress in Russo-Ukraine peace talks has waned a little as Russian attacks have continued and officials expressed skepticism. For now, these two factors seem to be underpinning WTI above the $100 mark.Full Article
Along with today’s release from the SPR, the White House announced that it would authorize the use of the Defense Production Act for green metals. That will help cut through red tape and get projects underway.
Earlier today, Goldman Sachs analyst Nicholas Snowden was talking in Santiago, Chile and sounding the alarm bells about a looming copper shortage.
He said that at some point the supply shortage “becomes so compelling that you can’t sit on the sidelines and watch prices continue to rise.”
He noted that trading volumes had dried up recently because of the madness in nickel, something he suspected will reverse soon.
Copper “is under priced and cannot remain at $10,000 per ton or we’re going to run out of copper by the middle of this year,” he said. “We have to reprice higher and it has to come extremely soon.”Full Article
The Biden Administration will release 1M barrels per day in oil from the US Strategic Petroleum Reserve (SPR) over the next six months, according to a statement released by the White House on Thursday. The White House statement continued that the President will call on Congress to pass his plan to speed the transition to clean energy that is made in America and that President Joe Biden will issue a directive authorising the use of the defense production act to secure American production of critical materials to bolster the domestic clean energy economy.
A Senior Biden Administration official said that the SPR would be restocked when prices are lower and that the release had been coordinated with allies and partners around the world. International Energy Agency (IEA) member nations will meet on Friday from 1200 GMT to discuss a potential collective oil release, a spokesperson for the New Zealand government said on Thursday.Full Article
Chainlink (LINK) price is still increasing, although most markets have been put on the back foot a bit in a slight change of sentiment overnight. Global markets took a step back as investors realised no real breakthrough had been made in the peace process, and after EU inflation numbers were seen running out of control. Whereas on Tuesday markets perceived that tail risks were diminishing, they now seem only to have got bigger and are weighing more on price action.
Chainlink price has had a nice spring rally thus far with investors, depending on where they entered, looking at 14% to 33% of gains. So far so good, because investors are set to be in for a bumpy ride as markets get nervous about tail risks that are quickly filling the gap after a breakthrough in negotiations was communicated from both Ukrainian and Russian negotiators. Yet until a solid deal materialises, and with the rising risk of inflation, supply constraints, the considerable risk is that Russia will not uphold its promise and the war could become a significant tail risk again.
LINK price, is currently still surfing on the upturn in market mood, but it could quickly see quite a lot of those tailwinds turn into headwinds if a domino effect triggers a massive turnaround. The question is if LINK price will be able to hit $19.55 before the Relative Strength Index (RSI) breaks into the overbought area. Expect price action to fall back to $14.95 where the monthly pivot, a historical level and the green ascending trendline all lie just a few cents away from each other. Should those headwinds prove that severe, expect another leg lower towards $11.46, just above the monthly S1.
LINK/USD daily chart
The signals mentioned above could be ignored if the Nasdaq this evening can close out with a profit above +1% again, making up the loss from yesterday which came from profit-taking on a buy-the-rumour-sell-the-fact trade setup. Investors will look further into the summer projections and see that risk assets still hold solid gains with LINK than seeing more broad buying along the way in the rally towards $19.55, just above the monthly R1. Should bulls be able to close above, that opens the door to a jump to $22.00 with the 200-day Simple Moving Average just above.
The US dollar legged lower right across the board in the past few minutes. It wasn’t due to any news, it was flows ahead of the month-end/quarter-end London fx.
These moves often slowly reverse over the next few hours.Full Article
The EUR has clawed back some of its recent losses vs. the NOK in recent weeks. However, economists at Rabobank expect the EUR/NOK pair to grind lower towards 9.50 the next quarter.
“Due to energy security, the eurozone economy is faced with more risks than the Norwegian. Additionally, wage inflation and over-heating risks are larger for Norway.”
“We expect EUR/NOK to continue to trend lower in 2022. We see scope for a move back to the 9.50 area on a three-month view.”Full Article
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
The NZD/USD pair maintained its offered tone through the early North American session and was last seen trading near the daily low, around the 0.6940 region.
Having faced rejection near the 0.7000 psychological mark, the NZD/USD pair witnessed some selling on Thursday and snapped two days of the winning streak to the highest level since November 2021. The US dollar made a solid comeback and has now reversed the previous day’s losses to a nearly two-week low. This, in turn, was seen as a key factor that exerted downward pressure on spot prices.
The incoming geopolitical headlines dashed hopes for a breakthrough in the Russia-Ukraine peace talks. This, along with the growing prospect of new Western sanctions against Russia, tempered investors’ appetite for riskier assets. This was evident from a fresh leg down in the equity markets, which drove some haven flows towards the greenback and weighed on the perceived riskier kiwi.
Apart from this, expectations that the Fed would adopt a more aggressive policy stance to combat high inflation acted as a tailwind for the buck. In fact, the markets have been pricing in a 50 bps Fed rate hike move at the next two meetings. The bets were reaffirmed by Thursday’s release of the US Core PCE Price Index, which rose to 5.4% YoY in February from the 5.2% in the previous month.
The combination of supporting factors helped offset the ongoing decline in the US Treasury bond yields, which, so far, did little to hinder the intraday USD positive move or lend support to the NZD/USD pair. It, however, would be prudent to wait for strong follow-through selling before confirming that the pair has topped out in the near term and positioning for a deeper correction.