USD holds gains as Sterling and Yen weaken

USDCAD, H4

The dollar has been trading firmer so far today, while weakness in the yen and sterling have remained themes. The dollar bloc currencies have also seen particular weakness, concomitantly with corrections in commodity prices and global stock markets. EURUSD, meanwhile, has flat-lined in the mid 1.2300s, remaining comfortably off the three-week high posted on Tuesday at 1.2414 and comfortably above the week’s low at 1.2324. USDJPY nudged out a one-week high at 107.73 during the Tokyo session, coming within 5 pips of last Friday’s two-month peak. The move reflected dollar firmness as EURJPY and other yen crosses traded flat or modestly lower. In data today, Japanese March CPI came in at the expected 1.1% y/y in the headline reading, while the BoJ-watched core reading ebbed to a 0.9% y/y rate from 1.0% y/y, which underscores the recent and ongoing concerns about chronically below-target inflation of Japanese policymakers. Sterling extended losses generated this week by a triple set of sub-forecast top-tier data releases. Cable is down for a fourth consecutive day, this time logging a two-week low at 1.4055, while EURGBP is up for a fourth consecutive day, logging a three-week high at 0.8778. As for the dollar bloc, AUDUSD logged an 11-day low at 0.7705, and USDCAD a 10-day high at 1.2676.

For the USDCAD a correction in oil prices, which have descended to back near the $68.0 in the WTI benchmark market after making a 40-month high at $69.56, along with a generally firmer bias in the U.S. dollar, have driven the rebound in USDCAD. The Canadian dollar had already been coming off the boil in the wake of the BoC’s mid-week policy meeting, where the statement indicated that the central bank would maintain its cautious stance on future policy changes, which remain data dependent. The latest price action in USD-CAD suggests a weakening in the downside trend that’s been developing over the last three weeks, from levels near 1.3100. The Daily Pivot is at 1.2645.

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