These birds of a feather don’t stick together

Forex 4 minutes to read

Michael O’Neill

FX Trader, Loonieviews.net

Summary:  The Canadian and Australian dollars went their separate ways today, each because of news on the inflation front. Meanwhile, equities shed their initial China-inspired gains when disappointment over Netflix filtered through.


The loonie and kiwi are a couple of birds with a glaring difference - the loon can fly and the kiwi cannot. That difference was on full display today. Kiwi face-planted after weaker than expected New Zealand inflation data while the loon soared when Canadian inflation beat expectations.

Statistics Canada reported that CPI rose 1.9% in March, year over year, well above the 1.5% level recorded in February. However, CPI excluding energy rose 2.2%. At the same time, Canada’s trade deficit narrowed in February and the January deficit was revised down as well. The news knocked USDCAD from 1.3338 to 1.3270. Prices bounced to 1.3338 as of 1410 GMT, due to a drop in WTI oil prices and the better than expected US trade data, which underpinned the greenback.

USDCAD is underpinned bullish technicals and a dovish Bank of Canada monetary policy outlook. Fibonacci support is at 1.3270 which represents the 50% retracement level of the February/March range. Prices continue to gravitate around the 100-day moving average at 1.3333. However, expectations for a Canadian growth rebound in Q2 and steady to high oil prices are capping topside moves.

The US goods and services deficit narrowed 3.46% to $49.4 billion in February which is an eight-month low. Some economists expect today’s data to contribute to a 1% jump in Q1 GDP which gave a bid to the US dollar.

The greenback is trading close to unchanged since New York opened against most of the major G10 currencies with AUDUSD and NZDUSD losing ground.
Wall Street opened with a bit of a pop, thanks to the earlier China data, but prices quickly deflated in early trading. Traders were not overly thrilled by quarterly reports from Netflix, (NFLX) which is down 1.34% or IBM which sank 5.22% in early trading. It wasn’t all bad news. Morgan Stanley (MS: NYSE) beat profit and revenue estimates and its shares are up 1.0%.
USDCAD. Source: Saxo Bank

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)
Full disclaimer (https://www.home.saxo/legal/saxoselect-disclaimer/disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

International

Trade responsibly
All trading carries risk. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.