CAD falling hard across the board
Yesterday's BoC statement really lit a fire under USD/CAD, which has now raced back through the 1.3300's, taking out 1.3400 and now making eyes at the psychological 1.3500 level. In light of the fact that the USD is king of the FX markets at the moment, traders are looking for the best opportunities to trade against this backdrop, as time and again, we see the greenback winning out in all scenarios.
Risk sentiment has clearly been hit hard at the moment, and the US indices look set to open in a sea of red based on the futures markets, and traditionally, we would have expected to see the JPY and CHF rallying as investors rush for safety. That safety is now being found in the USD, which is also finding buyers in calmer markets as yields continue to draw in demand.
For the CAD specifically, this afternoon's could add further pressure on the CAD, as the risk related currencies are expected to come under the most pressure. Another heavy sell-off in stocks will do the CAD no favours in the current climate, and losses are likely to be matched by those in the AUD, and to some degree NZD.
We now also see Oil prices taking a fresh leg lower in what looks set to be the third time that markets are going to test sub $50.0 levels in WTI, so it is no surprise to see the market relentlessly pushing north in USD/CAD in anticipation of a fallout this afternoon.
One ray of hope for CAD buyers at these levels could be the press conference by BoC governor Poloz this afternoon. Poloz has proved to be a stabilising factor on the CAD in previous episodes and he may moderate some of the bearish sentiment on Canada and the CAD after the negative perception taken by the market. The press conference is scheduled for 13.35 this afternoon London time.