Asian stock markets are lower, while European and US equity index futures are showing losses of around 3%. Data out of Asia today were nothing short of dismal, showing manufacturing contracting across most of the region, highlighting the economic toll that virus-containing measures are having.
The main concern remains that the massive global stimulus measures simply won’t be fully effective while many economies remain in a state of lockdown of as-yet unknown duration.
Commodity currencies have come under pressure as the winds of risk aversion picked up again.The Canadian dollar was the main loser so far today , while it has remained under pressure with oil prices sinking back toward major-trend lows as crude storage facilities burst at the seems from excessive supplies.
USDCAD has gained up nearly 2% in making a 1.4230 high, though the pair so far has remained below yesterday’s peak at 1.4350. This is due to the fact that crude prices are down by over 65% year-to-date. This level of price decline in Canada’s principal export, while it sustains, marks a significant deterioration in the Canadian economy’s terms of trade. Given the glut of crude flooding the market, and given that supply is increasing as demand will remain weak for a historically protracted amount of time, Canadian Dollar is anticipated to remain apt to underperformance. The likes of the Norwegian krona, which like the Canadian dollar is an oil-price correlator, and many developing world currencies have also come under pressure.
From the technical perspective, USDCAD overall outlook remains positive with asset holding above all three daily SMAs since January, and momentum indicators positively configured. RSI at 59 recovery from a pullback last week, Stochastic rebound from oversold territory and MACD presents some decline of the bullish momentum but holds well above 0. That said, USDCAD revisiting its recent 17-year high at 1.4669 seems likely before long.
Intraday meanwhile, the rebound of USDCAD looks to run out of steam, however only a move below 1.4050 could suggest a reverse of the outlook.
AUDUSD tipped over 1% lower in making a 5-day low at 0.6064 amid weaker Gold prices (end-of-quarter flows). The Aussie still remains comfortably above the 17-year low that was seen on March 19th at 0.5507. The Kiwi dollar has also taken a tumble.
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Andria Pichidi
Market Analyst
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