- USD/CAD runs towards a 100% recovery, sellers looking to cash in.
- US dollar picking up the EM sell-off, US yields make a comeback.
- Coronavirus, with no signs of slowing, keeping CAD bulls at bay.
With market sentiment rebounding somewhat as ongoing concerns over the coronavirus have been granted a reprieve, at least for now, US yields have rallied, lifting the US dollar which in turn has lifted all boats – USD/CAD reached a fresh 1.3301 high having travelled from 1.3263 the low.
The US dollar is on fire. US 10-year yields are +5.50%, trading back above 1.61% and the DXY pierced 98 the figure. The coronavirus remains a threat but the markets are brushing off the concerns, although the deterioration in risk appetite to date and the sell-off in many commodities and EM currencies appears to have given USD longs a boost.
The S&P 500 has made a nice comeback this week, +1.70% at the time of writing, recovering from Friday's rout on Wall Street. Also, last night's outcome of the Reserve Bank of Australia's interest rate meeting raised some optimism in markets as well whereby the RBA left rates on hold with an upbeat assessment of the forward economic outlook.
USD/CAD is on fire, but corrections in the offering
USD/CAD has been on fire of late, with little respite in what could be regarded as a move which has probably gone a little too far at this juncture having near enough completed a 100% recovery of the Nov-end of Dec range in roughly the same frame time from the begging of the year to now. The price of oil is also looking for a sustained correction just as OPEC's technical committee convenes to deliberate on the need for an emergency production curtailment due to the economic impact of the coronavirus.
Meanwhile, casing minds back to Friday, industry-level Gross Domestic Produce rose by 0.1% in November, coming in slightly above expectations for a flat print which should give the CAD some reprice in coming sessions – the CAD barely budged following the release, so a better late than never bid could be in the asking.
Spread of coronavirus shows no signs of slowing
However, the spread of the COVID-19 shows no signs of slowing which is likely keeping the bulls at bay while China reports another major spike in both confirmed cases and deaths in the region at the heart of the epidemic. The total number of confirmed cases in China now stands at 20,438 as of Tuesday morning, an increase of 3,235 on the previous day – an over 18% jump. The death toll is now at 425 in China, an increase of around 65 from Sunday.
"With the near-term outlook for risk challenged with uncertainty over potential supply chain disruptions owing to the virus, there really isn't much here to compel major excitement in CAD one way or the other," analysts at TD Securities argued, suggesting that 1.3220/30 remains a notable pivot (200dma) arguing that given the run in USD/CAD since the start of the year, some consolidation is likely to be in the offing.
|Today last price||1.3276|
|Today Daily Change||-0.0022|
|Today Daily Change %||-0.17|
|Today daily open||1.3298|
|Previous Daily High||1.3305|
|Previous Daily Low||1.3232|
|Previous Weekly High||1.3255|
|Previous Weekly Low||1.3148|
|Previous Monthly High||1.3255|
|Previous Monthly Low||1.29|
|Daily Fibonacci 38.2%||1.3277|
|Daily Fibonacci 61.8%||1.326|
|Daily Pivot Point S1||1.3252|
|Daily Pivot Point S2||1.3205|
|Daily Pivot Point S3||1.3179|
|Daily Pivot Point R1||1.3325|
|Daily Pivot Point R2||1.3351|
|Daily Pivot Point R3||1.3398|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.