– Dovish BoJ and free-falling CNY undermine commodity bloc currencies

– Global stocks rebound despite rising Russia tensions

– US dollar opens higher across the board, CAD outperforms

USDCAD Snapshot: open 1.2834-38, overnight range 1.2800-1.2876, previous close 1.2817, WTI open $102.21, Gold open $1,889.36

The Canadian dollar traded erratically overnight but opened in NY unchanged from Wednesday. Canadian dollar traders ignored comments by Bank of Canada Governor Tiff Macklem and focused on external developments.

Yesterday, Governor Macklem testified before the Senate Banking Committee. He said that Canadian rates need to rise quickly because the “economy is overheating.” He added that they needed the economy to cool because it is creating inflation and that the Bank would raise interest rates “forcefully, if needed.”

His comments should have sparked a flurry of Canadian dollar demand. They didn’t. USDCAD traders are fixated on external forces, mainly the Russia and Ukraine war, the US interest rate outlook, and S&P 500 performance.

USDCAD see-sawed in a 1.2800-1.2876 range mainly due to month-end portfolio manager demand for US dollars. The S&P 500 is poised to finish the month down over 2.0%, forcing some portfolio managers to sell Canadian dollars to realign their benchmarks.

The major Asia equity indexes got a boost from better than expected Meta Q1 earnings and closed with gains. Japan’s Nikkei 225 index rose 1.75% , getting an added lift from a dovish Bank of Japan monetary policy meeting. Australia’s ASX 200 rose 1.32%.

European bourses ignored hostile Russian rhetoric and the German Dax index is 1.61% higher but a tad below its best level. S&P 500 and DJIA futures are pointing to a robust open on Wall Street.

EURUSD traded with a negative bias in a 1.0482-1.0563 range after prices broke below support at 1.2550 yesterday.

A surprise 0.25% rate hike by Sweden’s Riksbank, which raised interest rates from 0.0$ to 0.25% gave EURUSD a bit of a boost, but the gains have since been erased.

EURUSD sentiment is bearish due to ongoing concerns that the Russia and Ukraine war may trigger a recession in the EU, which handcuffs the ECB’s ability to address rising inflation.

GBPUSD is at the bottom of its 1.2438-1.2568 range on the back of month end portfolio rebalancing flows. However, bottom fishers may be lurking as the Bank of England is expected to raise interest rates at next Thursday’s meeting.

USDJPY screamed higher overnight, rising to 131.01 from 128.35, after a very dovish Bank of Japan monetary policy statement. The BoJ left rates unchanged at 0.1%, which was not a surprise. Traders were taken aback by the sharp downgrade in the 2022 GDP growth forecast to 2.18% from 2.8%, but the Yield Curve Control (YCC) strategy caused turmoil. The BoJ said it will offer to buy 10-year JGB’s at 0.25% every business day as needed.

USDJPY spiked on the news forcing Finance Ministry officials to say “they would respond “appropriately” to abrupt moves. Prices retreated after the comments.

US GDP and weekly jobless claims data is ahead.

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