Thursday April 14th, 2022

The US$ dips, oil prices slip, equity markets are mixed, while US yields ease as risk sentiment improves. The US$ index weakens potentially snapping a 9-day winning streak amid improving risk sentiment and easing US yields. Euro rebounds as focus shifts to the ECB interest rate decision; the central bank is expected to stay on course to unwind stimulus, while leaving rates unchanged. In Ukraine reports that missiles struck and crippled the Russian flagship Moskva and President Zelensky warns of new Russian offensive to avenge defeats. Moscow says it will bolster defenses if Finland and/or Sweden join NATO. Intraday alongside the EBC rate decision focus will be on US Retail Sales and US Initial Jobless claims will provide currencies direction today. In other news. China is set to loosen credit, but economic damage may be too deep to see a quick turnaround. China’s GDP growth seen slowing to 5% in 2022 due to the impact of covid restrictions. Singapore & South Korea lead Asia’s central banks as both tighten their interest rates in an attempt to tackle rising inflation. The UK approves Valneva’s easy-to-store covid shot. Austrian leader says President Putin told him gas payments in Euro’s can continue. The currency markets.  Euro strengthens ahead of the ECB rate decision; three-quarters of Japanese firms concerned the current weak JPY is bad for business & AUD stalls as domestic jobs growth disappoints. CNY dips 0.1%, SGD rallies 0.6% on rate increases while other Asian currencies are down 0.15% on average vs US$. Trading currencies are mixed with ZAR falls 0.65%, MXN & NOK weakens 0.15%, AUD down 0.05%, while CHF is flat, and JPY & NZD are up 0.3% vs US$.

Oil prices slip as markets weigh mixed supply signals with a larger-than-expected build up in US oil stocks vs ongoing concerns over potential Russian sanctions. The C$ extends its gains following the BoC’s 50bps rate hike on Wednesday alongside an improving market risk sentiment and a weakening US$. Intraday US Jobs report & Retail Sales and to a lesser degree CAD Manufacturing Sales & Wholesale sales will provide direction to the loonie today. Expect C$ to remain vulnerable to retest 1.26 on weakening oil prices, but our bias remains to sell US$ on any spikes. Support resets to 1.2535, if breached look for 1.2477 next, while resistance lowers to 1.2610.

Euro rallies 100bps in 24 hours as investors switch focus to the ECB meeting. The combination of a weakening US$ and the anticipation of a hawkish ECB meeting today. Investors anticipate the ECB will keep rates on hold, continue to unwind stimulus, and markets speculate the EBC could look to raise rates as soon as December 2022. Intraday US Retail Sales & US Jobs will help provide direction to the Euro today. Support resets to 1.0880, while resistance rises to 1.0950.

EURGBP holds steady heading into the ECB interest rate decision. Support holds at .8300 (1.2048) while resistance remains at .8425 (1.1869).

GBP attempts to retest 1.3150 amid a shift to risk-on sentiment. The US$ looks set to break its 9-day winning streak as risk-sentiment rises heading into a potential hawkish ECB statement. Domestically soaring inflation levels increased expectations that the BoE will likely increase interest rates again at its next meeting. Our bias remains the pound will likely remain under pressure vs US$ but has room to strengthen vs Euro into Q2/22. Support resets to 1.3060 while Resistance rises to 1.3170.