Thursday April 23rd, 2020

Oil prices rebound +10% as tensions between US & Iran grow and output cuts begin. US$ index vs a basket of major currencies is relatively flat. Petro currencies rebounded with NOK and RUB both +0.75% vs US$. Asian AUD & NZD currencies strengthened marginally as Oil rebounded as sense of calm returns to the market. A slew of key data releases today including US Jobless claims, US PMI, US New Home Sales & Kansas Feb manufacturing Activity will dictate direction today.

The oil price roller coaster continues with oil rallying +10% overnight following the US Presidents announcement he had instructed the US Navy to fire on any Iranian ships that harass it in the Gulf.  In a statement later the US President said that he was not changing the military rules of engagement. C$ was relatively stable overnight as oil prices rebounded. Analysts are starting to predict a longer-term weaker C$ with lower oil prices curbing Canadian oil production and the ongoing negative economic impact on Canadian economy related to the coronavirus. BoC expects inflation to fall to near zero in Q2. No key Canadian data today, expect C$ to track oil and US data releases for direction. 1.4265 remains key resistance with 1.4085 providing intraday support.

Euro came under selling pressure after very weak PMIs data releases this morning, the results fell below an already depressed expectation. Also, EU leaders meeting is underway and initial reports suggest that the leaders remain divided on a mutual debt solution, the size and requirements for stimulus packages. The outcome of the EU meeting and the US Data releases will dictate intraday direction. 1.0750 will provide initial support with key support residing at 1.0640, with resistance at 1.0880.

GBP firmed vs US$ on comments from the UK Health Secretary saying that the UK has reached peak of coronavirus outbreak. The Health Secretary says social distancing is working but lockdown will remain, while Scotland publishes its plan for easing lockdown restrictions. UK PMI data this morning came in much weaker than expectations, but investors appear to have ignored the data and focused on the health Secretary comments. Intraday US data will be the primary driver for direction. Initial support 1.2275, if breaks 1.2160 will provide key support with resistance returning at 1.2450.