Canadian Dollar Update, August 17, 2021 – Canadian Dollar Sinks on Risk Aversion
USD/CAD Open: 1.2612-16, Overnight Range: 1.2577-1.2628, Previous Close: 1.2575
WTI Oil is at $66.73 and gold is at $1,787.20. US markets are lower today.
For today, USD resistance is at 1.2693. Support is at 1.2592.
• Geopolitical tensions, and COVID-19 sour risk sentiment
• NZDUSD crushed by draconian coronavirus measures
• US dollar rises on safe-haven demand
The Canadian dollar dropped in Asia due to a bout of risk-aversion selling. The rise in the number of coronavirus delta-variant cases in many regions, the ongoing Chinese regulatory crackdown, and geopolitical tensions, drove equity markets lower, and fueled safe-haven demand for US dollars.
NZDUSD got the ball rolling. The New Zealand government’s ham-fisted reaction to a single-case of the coronavirus delta-variant led to the currency free-falling to 0.6909 from 0.7028. One person in Auckland had the COVID-19 delta variant and the government locked down the entire country of 4.9 million people.
The move led economists to amend their predictions for tomorrows RBNZ monetary policy meeting. Westpac Bank and ASB Bank no longer expect a 0.25% rate hike, believing the COVID outbreak will force the central bank to leave rates unchanged.
The RBA minutes from August 3 were released and a comment that the central bank will react to a new COVID-19 outbreak, suggested it would upset the tapering agenda, sending AUDUSD lower.
The Canadian dollar was collateral damage when the antipodean currencies plunged, and the US dollar rallied on safe-haven demand. The Canadian dollar saw added pressure from relatively soft oil prices (compared to two-week ago levels). US Retail Sales and Fed chair Powell’s speech will provide direction today. There are not any actional Canadian economic reports available until July CPI data (forecast 3.4% y/y), Wednesday.
EURUSD traded in a 1.1761-84 range and is at the bottom of that band in NY. Eurozone Q2 GDP was confirmed at 2.0%. EURUSD may get a bit of support as the latest surge of COVID-19 delta cases in the US could take the pressure off Fed officials to begin tapering.
GBPUSD dropped from 1.3834 to 1.3787, on the back of broad US dollar demand. Traders ignored a better-than-expected UK employment report, as it was due to the reopening of the economy. A break below 1.3750 would extend losses to 1.3610.
USDJPY chopped about in a 109.13-109.42 range. Prices were weighed down by same haven demand for JPY and soft US Treasury yields. Government officials plan to extend the Tokyo coronavirus emergency until September 12.
US Retail Sales, Business Investment, Capacity Utilization and NAHB Housing reports are ahead. Fed Chair Powell speaks at 2:00 pm ET.
Today’s Suggested Range USD/CAD: 1.2590 – 1.2690