Higher oil prices will support commodity currencies with a high probability of a decline in AUD/USD and USD/CAD pairs

Part of the global trading floors is closed today due to the continuation of Easter holidays. A bright Monday is celebrated, which is clearly manifested in the low activity of investors. Although the United States will open tonight, it will undoubtedly revive the global financial market.

Evaluating the current situation in the markets, we still believe that the overall situation of uncertainty will continue. In our opinion, this supposition will remain in force until the Fed's position and the opinions of other world central banks that depend on it regarding the prospects for monetary policies becomes truly understandable.

So far, markets do not want to notice outright imbalances that manifest themselves in major economies after they are pumped with "cheap" money as a result of quantitative easing programs, which caused inadequate behavior of yield curves between short-term government bonds and long-term ones as manifested in the US. In particular, the US stock market continues to grow steadily currently, which is accompanied by a synchronous decline in market volumes. Here, it seems that the most important stimulating factor is the growth of expectations that the Fed will be forced not only to halt the process of raising interest rates but perhaps, even lowering them this year despite the slowdown of the American economy.

On Monday, oil prices soared by more than 2.0% due to the position of the US Administration, which will impose sanctions on all countries buying crude oil from Iran as reported by Bloomberg. Other news such as the Venezuelan crisis, events around Libya and by OPEC+ actions aimed at reducing oil production. It will stimulate inadequate price increases for "black gold". In this case, we should expect continued growth in commodity exchange rates, although limited.

With regard to the other currencies related to the major ones, we note that they will most likely remain in the range against the US dollar until trade disputes between the United States and China are resolved, as well as the position of the Fed regarding the prospects for monetary policy.

Forecast of the day:

The AUD/USD pair is likely to consolidate on Monday in the lateral range of 0.7135-0.7200. In case that the pair overcomes the level of 0.7135, it may continue to decline to 0.7090 in the opening of the US session.

The USD/CAD pair is not responding to a sharp rise in oil prices. However, if the pair overcomes the level of 1.3355, then it can continue to drop 1.3290 during the opening of in North American trading hours.



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