The buck sold off in NY trading as the counterintuitive relationship of higher US stocks and lower USD held again. US equities rose 1.25% led by surges in energy and utilities stocks. EUR/USD jumped more than 140 pips in the session towards the 1.2930 area. The pair made another try for the 1.2740/20 zone which looms as critical support here. The 1.2930/40 area is proving a decent barrier to upside as well, but we would expect strength on a break above there.
The JPY crosses were ultimately higher after spending most of the NY session in the basement. USD/JPY rose a modest 20 pips to 97.20/30 as weakness in the buck limited the upside here. EUR/JPY however was about 170 pips higher into the 125.70/80 zone. We would expect good follow through from stocks in Asia to see JPY crosses make another push into fresh highs.
The Canadian dollar finally had an up day as higher oil prices helped nudge USD/CAD lower. The pair plunged more than -250 pips into the 1.2470/80 area after making a high just above 1.2730. Oil rallied more than $3 in electronic trading and was now sitting well above the $69/bbl mark. Downside remains here while below $70/bbl and we would expect a reversal back into the $65/bbl zone to see USD/CAD retest the recent highs.
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