Commodity currencies slide to the worst levels of the day - USD/CAD threatens break

Why they are falling

Commodity currencies are at the worst levels of the day. The Canadian dollar is the laggard, in part because of the huge discount that's continuing to persist in Canadian crude oil.

In the bigger picture, commodities are solid today with prices as generally a mixed bag.

So what's behind the slide?

I think it's all about the bond market today. It's not just the rise in Treasury yields, it's a global move and that incudes Canadian debt.

My thinking is that the volatility in bonds is adding a bid to the US dollar on a flight to safety.

Finally, the Canadian dollar 3-month cross currency basis remains at extreme levels despite a rebound today.

In the big picture, USD/CAD is now threatening to break out of its 10-week range from 1.2650 to 1.2900.

That's a big level to watch in the day ahead.