USD/CAD: Longer-term risk reversals remain elevated - Scotiabank

Ross J Burland FXStreet

Analysts at Scotiabank explained current conditions surrounding USD/CAD.

Key Quotes:

"that Foreign Affairs Minister Freeland is not returning to Washington however low level NAFTA negotiations are said to be ongoing. "

"Domestic rate expectations have remained largely unchanged over the past two weeks, despite the apparent progress in trade talks. OIS are still pricing roughly 20bpts of BoC tightening for October and 25bpts by year end."

"The outlook for relative central bank policy has deteriorated slightly, given the firming in Fed expectations following last week’s NFP, and Canada’s terms of trade index has fallen to its lowest level since March."

"We would also note the renewed widening in oil price differentials with Brent threatening fresh highs and Western Canada Select threatening fresh lows. Risk reversals have seen a considerable divergence over the past week, with a material moderation in the premium for protection against short-term CAD weakness. Longer-term risk reversals remain elevated."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

EUR/USD recovers modestly, stays below 1.1900

EUR/USD gains traction and edges higher toward 1.1900 in the second half of the day on Thursday. The US Dollar struggles to benefit from the upbeat employment data following an initial positive reaction, allowing the pair to find a foothold.

GBP/USD holds above 1.3600 after UK data dump

GBP/USD clings to moderate gains above 1.3600 following the release of the UK Q4 preliminary GDP, which showed that the UK economy expanded at an annual pave of 1% in Q4. Meanwhile, the improving risk mood causes the USD to lose interest and helps the pair edge higher.

Gold retreats from February highs, holds above $5,000

Gold corrects lower after touching a fresh February-high above $5,100 but manages to hold comfortably above $5,000. The positive shift seen in risk mood limits the safe-haven precious metal's strength, while the trading action remains choppy ahead of Friday's key US inflation data.

LayerZero Price Forecast: ZRO steadies as markets digest Zero blockchain announcement

LayerZero (ZRO) trades above $2.00 at press time on Thursday, holding steady after a 17% rebound the previous day, which aligned with the public announcement of the Zero blockchain and Cathie Wood joining the advisory board.

A tale of two labour markets: Headline strength masks underlying weakness

Undoubtedly, yesterday’s delayed US January jobs report delivered a strong headline – one that surpassed most estimates. However, optimism quickly faded amid sobering benchmark revisions.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.