Volatility continues as Ukraine invasion drags on
USD/CAD => The pair holds steady above 1.2650
DAX => The index falls towards 14000
AUD/JPY => The pair rises towards 84.00
USD/CAD looks to Canadian GDP
USD/CAD ended the session yesterday flat, closing an approximately the same level that it opened. The greenback was supported by safe haven demand and the Canadian dollar was underpinned by rising oil prices. Oil rose 4.5% on Monday on supply disruption fears after the West excluded Russian banks from the SWIFT international payment system, potential creating problems with exports. Today the pair is holding steady with plenty of data in focus from both Canada and the US. The Canadian economy is expected to have grown 6.2% in the final quarter of the year at an annualised rate, up from 5.4% in Q3. Strong economic growth just ahead of Wednesday’s BoC rate decision could fuel bets of a rate hike. Canadian manufacturing PMI will also be in focus as well as US manufacturing data.
| Canadian GDP Q4 YoY
US ISM Manufacturing PMI |
Expected: 6.2% (0.4%)
Expected: 58 (0.4) |
Previous: 5.4%
Previous: 57.6 |
Where next for USD/CAD?
USD/CAD has been trading relatively range bound since late January, capped om the upside by 1.28 and on the lower side by 1.2650. The pair trades at the lower end of the horizontal channel, falling through its horizonal 50 sma. The RSI is neutral giving away few clues so a breakout trade could be on the cards. Sellers could look for a move below 1.2650 to break lower towards 1.2565 the January 26 low ahead of 1.25. On the upside, buyers could look for a move over 1.28 to target 1.2850 the late December high and 1.2875 the 2022 high.
DAX extends decline on Ukraine invasion
The DAX fell 0.7% in the previous session as investors digested the latest Russia, Ukraine developments. Risk off trade dominated as the West applied harsh sanction to the Russian financial system, cutting Russia off the from the financial markets and precenting the Russian central bank from using its foreign reserves. The strong move by the West sparked fears of retaliation from Russia in addition to slowing economic growth and rising inflation. Today German DAX is falling again as Russia Ukraine fighting continues. German inflation data is under the spotlight and is expected to rise to 5.1%, up from 4.9%. German retail sales are also expected to rebound from weakness in December.
AUD/JPY rises post RBA decision
AUD/JPY fell 0.15% yesterday as falling risk sentiment pulled the riskier aussie dollar lower, whilst boosting demand for the safe haven Japanese yen. Today the pair is rising following the RBA monetary policy decision. The RBA voted to keep monetary policy unchanged and the interest rate at 0.1%. The central bank warned over uncertainty from Ukraine. However, analysts have also brought forwards their rate hike expectations, lifting the aussie. A hike is now expected in the July – September quarter. A better-than-expected Chinese manufacturing PMI is also helping to lift the AUD.
| China Mfg PMI | Actual: 50.2 (0.1) | Previous: 50.1 |
Support for the pair can be seen at 82.80 (100 sma) and 0.82 (last week’s low)
Resistance can be found at 83.73 (falling trendline resistance) and 84.00 (February high)
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