– Opec announces surprise production cut.
– Tomorrow’s RBA decision a 50/50 guess.
– CAD outperforms as US dollar opens on mixed note.
USDCAD snapshot: open 1.3480-85, overnight range 1.3461-1.3535, close 1.3517, WTI $79.74, Gold $1966.22
The Canadian dollar is feeling rather frisky. Spring is in the air and so is greed.
Opec members were rubbing their hands with glee when a slew of western nations imposed sanctions on Russian energy exports.
Unfortunately for them, dreams of $100 /b oil prices vanished due to global growth slowdown fears stemming from China’s slow post-pandemic recovery and rising US interest rates.
WTI oil prices dropped from a January peak of $82.40/barrel to $64.40/b in April. That was too much for Saudi Arabia and friends. On Sunday, they announced another 1.0 million barrel/day cut and prices surged 7.7% immediately, rising to $81.50/b.
Analysts quickly revised forecasts. Goldman Sachs bumped its Brent oil (European benchmark) price to $95.00/b from $90.00/b.
The news is also going to make it more difficult for central banks to fight inflation and the odds of a Fed rate cut as soon as July are likely to fall from the current 65%.
Most G-10 markets are closed Friday for Easter. The US is the exception and nonfarm payrolls data will be released.
EURUSD traded in a 1.0789-1.0872 overnight after snapping a two-week rally when prices dropped below 1.0860 Friday. Prices have rebounded from the low following better than expected Eurozone Manufacturing PMI (actual 44.7, vs forecast 44.4), but need to extend above resistance at 1.0930 or risk another drop to 1.0790.
GBPUSD mirrored EURUSD moves, trading in a 1.2276-1.2367 range. UK Manufacturing PMI was a tick below the forecast at 47.8, but the results were ignored.
USDJPY rallied than sank, trading in a 132.83-133.75 range and it is sitting at 133.08 in NY. The Tankan Survey showed Large Manufacturers Sentiment index fell for the 5th quarter in a row. However, prices got a bit of a boost from a bit of US dollar demand following the Opec news.
AUDUSD rallied from 0.6653 to 0.6732 in NY buoyed by better than expected House Price data. The RBA monetary policy decision is tomorrow with economists evenly divided between unchanged and a 25 bps hike.
Today’s US data included ISM Manufactguring PMI.
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