FX update: Risk reappears to start the week

USD/CAD, H1

Commodity currencies have rallied out of early weakness as a risk-on theme took hold in markets, with Asian stock markets and European equity markets rallying on tentative signs in some locked-down countries that the coronavirus spread is being pushed from an exponential rate towards a linear rate, and with both France and Italy reporting a dip in the mortality rate. Japan’s Nikkei 225 and Australia’s ASX stock indices finished with 4%-plus gains. Chinese markets were closed for a public holiday in China today. The DAX & FTSE100 trade up over 3% currently.

Oil prices are down about 2%, as of the early London session. While Russia-Saudi talks on cutting output were delayed, the head of the Russian state wealth fund told CNBC said that a deal was “very, very close.” In the Forex realm, the biggest gainers out of the main currencies have been the Australian, New Zealand and Canadian dollars, while the biggest loser has been the Yen, which has seen is safe-haven premium unwind. AUDUSD, after initially dropping to an 11-day low at 0.5992, sprang back to an intraday high at 0.6048. AUDJPY rallied by over 1%. USDCAD retraced most of Friday’s gain in printing a low at 1.4113.

Sterling dipped in early trading on news that Prime Minister Johnson had been admitted to hospital 10 days after testing positive to the coronavirus. Cable posted a low at 1.2210 before recovering significantly to retake 1.2300. Friday’s low at 1.2206 was left unchallenged. Elsewhere, USDJPY gained over 0.5% in making a 10-day high at 109.24. EURUSD has been settled in a narrow range in the lower 1.0800s, above Friday’s 12-day low at 1.0773.