USDCAD daily
USDCAD daily

USD/CAD has pared today's decline to 38 pips and 1.3688 after falling as low as 1.3631.

The 50 pip bounce comes as sentiment deteriorates and oil prices turn lower once again. At the start of the session, we warned that the space to watch was US regional banks and the KRE ETF that represents them. That turned lower about two hours ago and it's slowly sucked risk trades down with it.

It remains at a session low, down 2% with eyes on embattled bank First Republic, which is down 6%.

The question here is whether banks need more help to shore up deposits and/or deposit flight. The Fed and ECB's actions in the past week indicated some bravado regarding bank flight and yesterday Yellen indicated the Treasury wouldn't take any steps to halt deposit flight. The question was more technical than the headline indicated -- the Treasury alone doesn't have the power to take that unilateral action without Congress -- but perception is reality in a bank run.

gross tweet

Gross warned that a recession is coming soon.

Tech continues to outperform but some of that is long-duration and AI so I wouldn't take it as a big positive signal for the broader economy.

As for USD/CAD, I think some of the risks around Canadian housing are fading for now with yields falling but risks around global growth are rising. Canadian oil will be an interesting spot for the next decade but with spot prices at $70, investment activity will slow and Canada's trade balance will worsen.