Canadian Dollar Update, January 27, 2021 – Canadian Dollar Tracking Antipodean Currency Moves
USD/CAD Open: 1.2719-23, Overnight Range: 1.2688-1.2730, Previous Close: 1.2697
WTI Oil is at $52.92 and gold is at $1,846.40. US markets are lower today.
For today, USD resistance is at 1.2804. Support is at 1.2713.
• FOMC statement released this afternoon
• EURUSD testing downside support
• US dollar opens on a firm note
The Canadian dollar continues to bounce between USDCAD support at 1.2690 and resistance at 1.2790. FX traders traded cautiously overnight ahead of this afternoon’s Federal Open Market Committee (FOMC) meeting.
The Fed is widely expected to leave rates and policy unchanged because of the January surge in new coronavirus cases and the prospect of massive fiscal stimulus from the Biden Administration. Fed Chair Jerome Powell reiterated his mantra of “low rates for a long time,” earlier this month, and the plans for a $1.9 trillion government spending plan, will ensure the Fed sticks to its wait and see approach.
The looming FOMC meeting had other asset markets on the defensive.
Asia equity indexes closed on a mixed note. European bourses are lower, and so are crude oil and gold prices.
EURUSD broke below minor support at 1.2120 which set the stage for additional losses to the 1.2050 area. Weaker than expected German Consumer Confidence didn’t help sentiment, although a soft report was expected due to recent lockdown measures in the country.
Verbal currency intervention by an ECB board member exacerbated negative sentiment. Klaas Knot said that the central bank had plenty of tools available to limit Euro gains if those gains had a negative impact on inflation.
GBPUSD rallied to 1.3758 in early European trading before plunging to 1.3698 in NY. Prices appear to be supported by post-Brexit demand for British assets and the UK’s outperformance in the vaccination sweepstakes. Britain has delivered 10 doses for every 100 people, compared to the EU’s 1 dose per 100 people. However, gains may be limited ahead of month-end, due to portfolio rebalancing flows.
AUDUSD posted better than expected Q4 inflation data. CPI rose 0.9% y/y in Q4, which was better than forecast but well-below the Q3 result. AUDUSD peaked at 0.7763 and dropped to 0.7698 in NY.
US Durable Goods Orders forecast at 0.9% for December, but the Fed meeting means traders will ignore the results.
Today’s Suggested Range USD/CAD: 1.2670 – 1.2770