Asia AM Digest: CAD Rises, Japanese Yen Looks to US Earnings News

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Current Market Developments – BoC’s Poloz Speech

As the FX market transitioned to Thursday’s session, Bank of Canada’s Governor Stephen Poloz was speaking at the Senate. He reiterated that higher rates will be warranted over time. Mr. Poloz also said that some risks to the outlook include lower oil prices and uncertainty over NAFTA. The former is limiting growth in the energy sector while the latter has been a key concern for companies. USD/CAD swung around his speech.

A Look Ahead – How will Asian Shares Handle US Earnings Beat?

Meanwhile, more US companies reported their first quarter earnings towards the end of Wednesday. Facebook and Qualcomm had earnings per share beats. Their stocks rose in after-hours trade. If Asian shares take this news well as Thursday gets going, then the anti-risk Yen may depreciate.

Prior Session Recap – USD Gains as Gold Falls

The US Dollar rose after taking a break on Tuesday, climbing to its highest since January 12th. Simultaneously, local 10-year and 30-year government bond yields rallied. Meanwhile, crude oil prices brushed off inventory gains reported from the EIA, climbing in the aftermath. The anti-fiat metal, gold, declined as the greenback rose.

Wall Street ended the day slightly higher, rising and falling throughout the day. Sentiment-linked currencies like the Australian and New Zealand Dollars fell during the first half of the day, oscillatting with stocks after that. The Canadian Dollar managed to put in a recovery during the second half of the day. Its appreciation was also accompanied with local front-end bond yields rising. Much like the Fed, the Bank of Canada is also expected to raise rates this year.

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IG Client Sentiment Index Chart of the Day: AUD/USD

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Retail trader data shows 67.4% of AUD/USD traders are net-long with the ratio of traders long to short at 2.07 to 1. The number of traders net-long is 0.9% higher than yesterday and 35.4% higher from last week, while the number of traders net-short is 4.1% lower than yesterday and 30.4% lower from last week.

We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests AUD/USD prices may continue to fall. Traders are further net-long than yesterday and last week, and the combination of current sentiment and recent changes gives us a stronger AUD/USD-bearish contrarian trading bias.

Five Things Traders are Reading:

  1. US Dollar Index (DXY) Forecast: Can the Busy May Open Disrupt USD? by Tyler Yell, CEWA-M, Head Forex Trading Instructor
  2. Japanese Yen May Fall Despite Split Sentiment by Dylan Jusino, DailyFX Research
  3. GBP/USD Snaps April Opening Range Ahead of U.K. GDP, Carney Comments by David Song, Currency Analyst
  4. Canadian Dollar Rate Forecast: CAD Breaks Downby Tyler Yell, CEWA-M, Head Forex Trading Instructor
  5. S&P 500 Grasps for Support as Treasury Yields, US Dollar Continue to Gainby James Stanley, Currency Strategist

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— Written by Daniel Dubrovsky, Junior Currency Analyst for

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