CAD Rides Oil Gains Higher, Holiday Mode Persist Elsewhere in FX

Apr. 22, 2019 (Western Union Business Solutions)  – FX markets remained in holiday mode with parts of the world observing Easter Monday. With a good chunk of the market closed, the U.S. dollar and big peers from Europe and Japan barely budged. Oil currencies like the Canadian dollar outperformed as crude pushed to new highs above $65 on reports that Washington is trying to impede Iranian exports. The Aussie and kiwi dollars weakened along with emerging markets. With the greenback little changed, it kept around multiweek highs scaled last week in the wake of rosy news on the U.S. economy which contrast fresh signs of weakness across the Atlantic. Data is likely to hold the keys to FX action this week, with attention on German business confidence Wednesday and U.S. first quarter growth Friday. The Bank of Canada Wednesday is widely expected to keep interest rates unchanged.

EUR

The euro favored multiweek lows in quiet holiday trade. Much of Europe is on a long holiday weekend for Easter. Once back from the break, Germany’s beleaguered economy will remain under the microscope. While chronic German weakness has weighed on the euro, any good news this week on Europe’s biggest economy might allow the single currency to rebound. Germany’s Ifo index of business morale on Wednesday is forecast to rise for a second straight month.

GBP

Sterling has descended toward the bottom of its range amid a revival in the U.S. currency. Meanwhile, the specter of several more months of the Brexit impasse dragging on has done little to whet appetite for the U.K. currency. The pound’s decline has it within a fraction of a cent away from technically important levels like its 200-day moving average. That level could act as a solid floor but if it gives way it could set the stage for accelerated losses over the short run.

CAD

Canada’s dollar rose in otherwise light holiday trading, getting a lift from oil topping $65, a new 2019 high. Other than that, many traders kept to the sidelines with Europe on a long Easter holiday weekend while others held off on meaningful wagers until the Bank of Canada issues its policy decision Wednesday. Slower growth of late suggests that Canada’s central bank will leave its benchmark interest rate at 1.75%. A status quo, cautionary statement would fit with the narrative of steady borrowing rates this year, a scenario that would likely keep USDCAD confined to its current range.

 

 

 

 

 


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