Forex News

CANADIAN DOLLAR, USD/CAD, CRUDE OIL, DOW JONES, FINANCIAL STOCKS – ASIA PACIFIC MARKET OPEN

• The Canadian Dollar gained with crude oil prices as Dow Jones climbed
• Financial stocks rose, mortgage giants extended foreclosure suspensions
• Asia Pacific stocks may rise, boosting the Australian Dollar as Yen falls

CANADIAN DOLLAR, CRUDE OIL, DOW JONES GAIN AS FINANCIALS LEAD STOCKS HIGHER

The growth-linked Canadian Dollar – which can at times be sensitive to crude oil prices – cautiously rose Thursday as sentiment recovered during the North American trading session. WTI crude oil closed at its highest since early April as the Dow Jones and S&P 500 wrapped up +1.62% and +1.15% at the end of the session. This followed earlier declines in equivalent futures contracts during Asia Pacific hours.

RECOMMENDED BY DANIEL DUBROVSKYForex for BeginnersGet My Guide

Financials lead the way in stocks. Reports crossed the wires that Fannie Mae and Freddie Mac – two mortgage giants – extended suspensions on foreclosures and evictions until June 20. These measures were taken as the coronavirus outbreak and subsequent lockdown laws dented economic health. Mark Calabria – the Federal Housing Finance Agency Director – said that “no one should be forced from their home” during the crisis.

Sentiment then improved later in the session as Connecticut corrected jobless claims down to 29,846 from 298,680. Nationwide jobless claims still surged over 2.9 million last week. That was higher than the 2.5 million consensus. Meanwhile House Speaker Nancy Pelosi left the door open for negotiations to pass a virus bill. This is as the White House threatened to veto the bill Democratic policymakers proposed this week.

Discover your trading personality to help find forms of analyzing financial markets

FRIDAY’S ASIA PACIFIC TRADING SESSION

With that in mind, we may see Asia Pacific equities follow the optimistic lead from Wall Street as the week wraps up. That may extend some of the slight gains from the sentiment-linked Australian Dollar over the past 24 hours. This may also bode ill for the anti-risk Japanese Yen. AUD/USD may also be closely watching incoming Chinese industrial production and retail sales data. These will offer further insight into the health of the world’s second-largest economy.

CANADIAN DOLLAR TECHNICAL ANALYSIS

Despite recent gains in the Canadian Dollar, USD/CAD remains in a persistent consolidative mode. Prices have been ranging between 1.3852 and 1.4265 since late March. The direction of the breakout may pave the way for the pair’s next trend given technical confirmation. The break under rising support from late February – pink line below – has struggled to achieve confirmation.USD/CADMIXEDData provided by of clients are net short.

CHANGE IN	LONGS	SHORTS	OI
DAILY	4%	-6%	-2%
WEEKLY	-3%	25%	12%

What does it mean for price action?Get My Guide

USD/CAD TECHNICAL ANALYSIS – DAILY CHART

Chart Created in TradingView

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter

Source Link

INDIAN RUPEE, US DOLLAR, USD/INR, CREDIT SPREADS, CORONAVIRUS – TALKING POINTS

• Indian Rupee could face uphill battle as country struggles with virus
• Local credit spreads have been widening and may continue that path
• USD/INR consolidating as bearish chart pattern lacks follow-through

As India approaches the expiration of extended lockdown measures this Sunday, the Indian Rupee may still face a challenging fundamental landscape. In late April, I warned that gains in INR could be short-lived if the nation extends social distancing measures. Since then, the currency has been in much of a congestion range against the US Dollar.

RECOMMENDED BY DANIEL DUBROVSKYForex for BeginnersGet My Guide

The nation is mulling resuming commercials flights by May 18 or perhaps sooner, but India seems to be struggling to make further inroads into lowering average case growth over a rolling weekly period. Meanwhile Markit India services and manufacturing PMI clocked in at a record-low 5.4 and 27.4 in April, down from 49.3 and 51.8 in March. Values below 50 indicate increasingly larger contractions in business activity.

Check out the newly-enhanced DailyFX economic calendar which now includes Indian data

According to the Centre for Monitoring the Indian Economy (CMIE), the unemployment rate is estimated to be at a record-high 27.1 percent. To help cope with the economic severity of the coronavirus outbreak, both fiscal and monetary authorities have jumped into action. Though there have been rising calls for more of the former. The government has thus far delivered on about INR1.7 trillion in stimulus, or about 0.8% of GDP.

In response, Prime Minister Narendra Modi outlined a plan to borrow INR12 trillion this fiscal year which is 54% more than what was budgeted. However, this plan could risk leaving out the corporate sector as state companies tend to account for most of local debt issuance. That may further inflate yields on domestic corporate bonds if they are perceived to be at a relatively higher likelihood to default on debt payments.

On the chart below, I have visualized the widening Indian credit spread since the beginning of this year. This is done by taking the difference between local 3-year AAA corporate bonds and the equivalent of sovereign notes. The spread is hovering around 260-basis points. Meanwhile global economic uncertainty is on the rise. As such, the Rupee may struggle in the coming weeks as the nation weighs easing social distancing rules.

How can central banks impact currencies?

WIDENING INDIAN CREDIT SPREADS

INDIAN RUPEE TECHNICAL ANALYSIS

USD/INR continues to trade sideways since prices approached new highs in late March. A Rising Wedge bearish chart pattern and negative RSI divergence preceded the pair topping just under 77. Downside follow-through has since been lacking. Resuming losses entails taking out 74.94 which would expose former peaks from 2018. Otherwise, uptrend resumption may have USD/INR surpassing 77.00.

USD/INR DAILY CHART

USD/INR Chart Created in TradingView

— Written by Daniel Dubrovsky, Currency Analyst for DailyFX.com

To contact Daniel, use the comments section below or @ddubrovskyFX on Twitter.

SOURCE LINK