All eyes on Commodity Currencies
<p>Asian stock markets are lower, while European and US equity index futures are showing losses of around 3%. Data out of Asia today were nothing short of dismal, showing manufacturing contracting across most of the region, highlighting the economic toll that virus-containing measures are having.</p>
<p><strong>The main concern remains that the massive global stimulus measures simply won’t be fully effective while many economies remain in a state of lockdown of as-yet unknown duration.</strong></p>
<p><strong>Commodity currencies have come under pressure</strong> as the winds of risk aversion picked up again.<strong>The Canadian dollar was the main loser so far today , </strong>while it has remained under pressure with oil prices sinking back toward major-trend lows as crude storage facilities burst at the seems from excessive supplies.</p>
<p><span> USDCAD</span> has gained up nearly 2% in making a <strong>1.4230</strong> high, though the pair so far has remained below yesterday’s peak at <strong>1.4350.</strong> This is due to the fact that crude prices are down by over 65% year-to-date. This level of price decline in Canada’s principal export, while it sustains, marks a significant deterioration in the Canadian economy’s terms of trade. Given the glut of crude flooding the market, and given that supply is increasing as demand will remain weak for a historically protracted amount of time, Canadian Dollar is anticipated to remain apt to underperformance. The likes of the Norwegian krona, which like the Canadian dollar is an oil-price correlator, and many developing world currencies have also come under pressure.</p>
<p>From the technical perspective, USDCAD overall outlook remains positive with asset holding above all three daily SMAs since January, and momentum indicators positively configured. RSI at 59 recovery from a pullback last week, Stochastic rebound from oversold territory and MACD presents some decline of the bullish momentum but holds well above 0. That said, USDCAD revisiting its recent 17-year high at 1.4669 seems likely before long.</p>
<p>Intraday meanwhile, the rebound of USDCAD looks to run out of steam, however only a move below 1.4050 could suggest a reverse of the outlook.</p>
<p><span>AUDUSD </span>tipped over 1% lower in making a 5-day low at 0.6064 amid weaker Gold prices (end-of-quarter flows). The Aussie still remains comfortably above the 17-year low that was seen on March 19th at 0.5507. The Kiwi dollar has also taken a tumble.</p>
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<p><strong>Andria Pichidi</strong></p>
<p><strong>Market Analyst</strong></p>
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