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On April 12th, Maybank senior strategist Fiona Lim stated that while the market may be somewhat disappointed by the lack of progress in US-Iran negotiations, this was not entirely unexpected. The US dollar may gain further upward momentum at the opening on Monday. Some Asian currencies, particularly those of net energy importers such as the South Korean won, Philippine peso, Japanese yen, and Thai baht, began to weaken last Friday and may continue to face pressure this week.On April 12th, Saxo Banks Chief Investment Strategist, Charu Chanana, stated that the failure of the US-Iran negotiations was a setback. For the market, this means the previous easing of tensions is likely to fade. Oil prices may rebound, risk sentiment will be dampened again, and the Strait of Hormuz, even without a complete closure, will remain a real choke point risk. However, this is not surprising given the significant differences in the two sides positions on nuclear safeguards and the Strait of Hormuz issue. For the US dollar, this means some renewed safe-haven support, but unless there is a new military escalation, a broad-based surge is unlikely. Gold may benefit from renewed geopolitical hedging demand, but the market is not yet fully back to the worst-case inflation shock scenario.Kremlin: Russia is prepared to sell natural gas to Europe if there is still a surplus in supply to "alternative markets".Kremlin: Russia currently has only 17% to 18% of Donetsk Oblast in Ukraine out of control.Kremlin: Even if Russia doesnt sell natural gas to the EU, the EU will find ways to buy it.

Near 1.3600, USD/CAD Meets Difficult Resistance Amid a Weak USD Index and Rising Crude Prices

Daniel Rogers

Mar 29, 2023 14:32

USD:CAD.png 

 

Near 1.3600, the USD/CAD pair encountered resistance during the Asian session. As the US Dollar Index (DXY) appears vulnerable to further losses below 102.40, the Canadian dollar appears to have a sturdy downside bias. The USD Index has found support near 102.40, but a retracement is likely as risk appetite improves.

 

The USD Index is under intense pressure as a result of the decline in U.S. banking concerns. As reported by Reuters, US House Speaker Kevin McCarthy stated in an interview with CNBC on Tuesday that "at this time" there is no need for universal insurance on all bank deposits, reviving concerns of a banking crisis in the United States.

 

Tuesday's S&P500 futures remained predominantly constrained in response to House Speaker Kevin McCarthy's remarks. The Federal Reserve (Fed) is expected to maintain a consistent tone when announcing its interest rate decision at its May monetary policy meeting, despite the optimistic market sentiment.

 

In the interim, demand for U.S. government bonds remained low due to investors' expectation that the nation will emerge from its banking crisis sooner. This led to a rise in 10-year US Treasury yields to 3.57 percent.

 

According to Bloomberg, the Canadian Dollar remained volatile on Tuesday after Finance Minister Chrystia Freeland's announcement that dividends received by financial institutions from holding domestic equities will be considered business income. This will generate billions in tax revenue from banks and insurance firms that receive dividends from Canadian corporations.

 

Due to a weakening US Dollar and expectations of additional sanctions against Russia, the price of oil has risen to close to $74.00 on the energy front. The US Energy Information Administration (EIA) oil inventory data will be attentively monitored for additional guidance. As anticipated, the US EIA will report an increase of 0.187 million barrels in oil stocks for the week ending March 24.

 

Notably, Canada is the leading oil exporter to the United States, and rising crude prices would strengthen the Canadian Dollar further.

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