USD / CAD - Canadian Dollar Sinks On Negative Risk Sentiment
Date
5/12/2023 3:09:41 PM
(MENAFN- Baystreet.ca)
USD / CAD - Canadian dollar sinks on negative risk sentiment
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- Renewed regional bank woes sours risk sentiment.
- US debt default risk sparks safe-haven demand.
- US dollar opens with gains, commodity currencies lose on the week.
USDCAD snapshot: open 1.3491-95, overnight range 1.3482-1.3501, close 1.3490, WTI $70.90, Gold $2002.61
The Canadian dollar is trading at the bottom of its overnight range and opened down 0.64% since Monday.
The Canadian dollar losses are not related to domestic issues but due to US regional bank woes and inflammatory headlines around the debt ceiling discussions.
A dearth of actionable economic data overnight has traders fixated on the US debt ceiling discussions (or lack thereof) and the media is filled with dire warnings of disaster if politicians fail to get a deal.
Yesterday's PPI and weekly jobless claims data reinforced recession fears and supported rate cut speculation.
Concerns about regional banks in the United States returned after PacWest Bank announced deposits declined 9.5% in May.
EURUSD traded in a 1.0889-1.0935 range and is at the low in early NY trading. The negative risk sentiment from USD debt ceiling concerns has overshadowed reports that the ECB will need to raise rates into September.
GBPUSD drifted lower in a 1.2508-1.2539 band. Traders mostly ignored news that the UK GDP fell 0.3% m/m in March because the 0.1% q/q result meant the country avoided a recession. Safe-haven demand for US dollars is the key driver for GBPUSD direction.
USDJPY traded quietly between 134.41 and 134.90. The yen experienced a surge in safe-haven demand due to caution surrounding the US debt ceiling issue. Gains were also capped by soft US 10-year yields.
AUDUSD traded sideways in a 0.6685-0.6705 band. The currency was pressured by negative risk sentiment around the US debt ceiling drama and by the recent, soft economic data from China.
Meanwhile, NZDUSD declined from 0.6299 to 0.6232 and has been the weakest performing major currency among the G-10 nations since the start of the week.
The release of the US Michigan Consumer Sentiment Index is scheduled for today.
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