USD/CAD: market tone is dominating, CAD is a growth-sensitive commodity currency - Scotiabank

Ross J Burland FXStreet

Analysts at Scotiabank explained that the CAD is weak, down from Monday’s close and extending its recent decline to fresh multi-month lows, a relative performer among the G10 in an environment of risk aversion and broad-based USD strength.

Key Quotes:

"The market tone is dominating, pressuring CAD as a result of its risk profile as a growth-sensitive commodity currency."

"Oil prices are falling and Canada’s terms of trade are deteriorating. Short-term domestic rate expectations continue to soften and OIS are now pricing in just 5bpts of tightening for May 30, 16bpts for July, while still pricing in one full 25bpt hike by September."

"Measures of sentiment remain remarkably steady however, as risk reversals are already pricing a sizeable premium for protection against near-term CAD weakness."

"Our FV estimate for USD/CAD, using oil prices and the 5Y spread, is now just below 1.2600."

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 retreats to daily lows near 1.1570

EUR/USD briefly pushed higher earlier in the session, climbing toward the 1.1650 area, but the recovery quickly lost momentum and the pair has drifted back to test the 1.1570 region. A more cautious market mood, driven by the escalating conflict in the Middle East, together with broad-based strength in the US Dollar, is making it difficult for the pair to maintain its footing.

GBP/USD loses the grip, focus is on 1.3300

GBP/USD remains on the defensive on Thursday, hovering around the 1.3320 region. The British Pound is coming under pressure amid growing concerns that rising energy prices could expose the UK economy to stagflation risks, while renewed safe-haven demand for the Greenback continues to weigh on the pair.

Gold drops to two-day lows near $5,100

Gold turns lower on Thursday, slipping back toward the $5,100 area. Persistent strength in the US Dollar (USD) is preventing the precious metal from building a meaningful recovery, even as markets remain risk-averse amid the deepening conflict in the Middle East.

Crypto Today: Bitcoin, Ethereum, XRP hold weekly gains despite US-Iran war

The cryptocurrency market is gaining strength on Thursday, building on Wednesday's upswing, which saw Bitcoin reach a weekly high above $74,000. Ethereum and Ripple are moderating their recent gains amid uncertainty stemming from the escalating war in the Middle East.

Two PMIs, two Chinas

China’s economic data are often treated with a degree of caution by global investors. The challenge is not necessarily that the numbers are incorrect, but that they can describe very different parts of a vast and complex economy. Nowhere is that more evident than in China’s PMIs.

Ripple tests recovery strength amid steady ETF inflows, growing retail interest

Ripple (XRP) continues to demonstrate notable resilience as the cryptocurrency market navigates the persistent war in the Middle East after the United States (US) and Israel attacked Iran on Saturday.