cancelling contracts

No. However, you don't work for the hospital, your agency is your employer. So it is your contract with them that is important.

In any case, hard to see how they could just get rid of half of their nursing staff. So hopefully moot.

Hmmm..over half of their nursing staff? they will not risk that..this I think is just rumor.

This is just to scare whoever into compliance.  If they do cancel you, if you feel it's especially dirty how they treat you, don't go back. 

Of course they can. A hospital system isn't going to keep travel staff if they aren't needed and pay them, as well as their regular staff if the patient census is low. 

Just 2 short years ago Covid hit and impacted my specialty, the Operating Room. Non emergent cases were cancelled nation wide and the Operating Rooms were being converted to Covid rooms because the OR's had ventilators that we use during surgery and were needed to keep Covid patients alive. As a result travel contracts for Operating Room RN's were cancelled all across the United States. For the first time in my decades long career, I was unemployed from April until September as the Operating Rooms were for Emergent cases only and most hospitals had enough permanent staff to cover that need. I had friends that were driving to their new destination and had their contract/agreement/assignment cancelled on them.

It's the same thing now. Hospital systems filled a staffing shortage with travel nurses. Covid is on the decline, and like it or not, the travel RN is going to be the first one to get let go. 

I didn't work 2020 for non-pandemic reasons, but just from reading the news about OR nurses being re-tasked to other departments lead me to believe that travel assignments also tanked for the OR. But strangely, CVOR sprang back after an initial drop, and continues to have crisis pay. One would think they would train existing general OR staff to meet CVOR needs. Sure, reputation for strong willed surgeons perhaps (some might say abusive), but really the work is not difficult. Easier than a total.