S&P 500 — US Large Cap Index
FTSE 100 — UK Blue Chips
Euro Stoxx 50 — Eurozone Leaders
DAX 40 — German Equities
CAC 40 — French Market Index
Nikkei 225 — Japan Benchmark
Hang Seng — Hong Kong Index
Shanghai Composite — China Mainland
ASX 200 — Australian Market
TSX Composite — Canada Index
Nifty 50 — India Large Cap
STI Index — Singapore Market
KOSPI — South Korea Index
Bovespa — Brazil Equities
JSE Top 40 — South Africa Index
IPC Index — Mexico Market
- USD/CAD trades with a positive bias for the third straight day, though it lacks bullish conviction.
- Rising geopolitical tensions and Fed rate hike bets continue to support the USD and spot prices.
- Elevated Crude Oil prices underpin the Loonie and hold back bulls from placing aggressive bets.
The USD/CAD pair attracts some buyers for the third consecutive day on Monday and trades just below mid-1.3900s during the Asian session, well within striking distance of a nearly four-month high set last week amid a firmer US Dollar (USD). The uptick, however, lacks bullish conviction as elevated Crude Oil prices could underpin the commodity-linked Loonie and cap gains for spot prices.
US President Donald Trump threatened to target Iran’s power plants and bridges if the Strait of Hormuz is not reopened by Tuesday, while Iran introduced new conditions for reopening the strategic waterway. This raises the risk of a further escalation of the ongoing conflict in the Middle East and continues to underpin the USD’s status as the global reserve currency. Adding to this, rising bets for an interest rate hike by the US Federal Reserve (Fed) turn out to be another factor supporting the USD and acting as a tailwind for the USD/CAD pair.
The closely-watched US Nonfarm Payrolls (NFP) report showed on Friday that the US economy added 178K new jobs in March, reversing the previous month’s revised net loss of 133K. Adding to this, the Unemployment Rate unexpectedly fell to 4.3% last month. This comes on top of inflation fears stemming from the war-driven surge in Crude Oil prices and removes any near-term pressure on the Fed to cut rates, which remains supportive of elevated US Treasury bond yields. The outlook, in turn, continues to support the USD and the USD/CAD pair.
Meanwhile, supply disruption worries lift Crude Oil prices to a nearly four-week top. This might hold back traders from placing aggressive bearish bets around the Canadian Dollar (CAD) and warrants some caution before positioning for any further move higher for the USD/CAD pair. Hence, it will be prudent to wait for a sustained strength and acceptance above the 1.3900 mark, or the year-to-date high, before positioning for an extension of a nearly one-month-old uptrend from the 1.3525 region, or the March monthly swing low.
