Canadian Dollar Update, March 12, 2021 – Canadian Dollar has Bullish Bias
USD/CAD Open: 1.2550-54, Overnight Range: 1.2526-1.2572
WTI Oil is at $66.01 and gold is at $1,725.80. US markets are mixed today.
For today, USD resistance is at 1.2483. Support is at 1.2453.
The Canadian dollar rallied yesterday and consolidated those gains overnight. FX traders focused on a surge in US 10-year yields that climbed from 1.518% to 1.605%.
That move soured risk sentiment, and the US dollar clawed back some of yesterday’s losses.
The Canadian dollar continues to be supported by the rebound in crude oil prices this year. West Texas Intermediate has risen over 28% since the start of the year, and many analysts expect prices to continue to rise. The gains are driven by ongoing OPEC, Russia, and Saudi Arabia’s unilateral production cuts. Those cuts, combined with expectations for a robust global post-pandemic economic recovery, will shift the supply/demand equation favouring producers.
The Canadian dollar is getting an added boost from President Biden’s $1.9 trillion COVID-19 Relief bill, which he signed yesterday. The expected boost to the US economy is beneficial to Canada due to the significant trade between the countries.
Statistics Canada releases the monthly Labour Survey report. Canada is expected to have added 75,000 jobs in February, a vast improvement over the 212,000 jobs that disappeared in January. However, the impact of the data on USDCAD trading will be negligible. The Bank of Canada maintains that domestic interest rates will remain unchanged until mid-2023, so today’s report is a non-event.
COVID-19 concerns are impacting sentiment in Europe. The German Health Minister said, “we are at the start of the third COVID-19 wave.” Italy is contemplating locking down some regions, including Milan. Even worse, AstraZeneca is reportedly shipping less than half of expected vaccines between April and June.
EURUSD dropped steadily overnight, falling from 1.1977 to 1.1911 in NY, as the surge in US 10-year yields soured risk sentiment. Yesterday the ECB said it would increase the pace of its Pandemic Emergency Purchasing Program (PEPP). The intraday EURUSD technicals are bearish below 1.1980, looking for a test of support at 1.1830.
GBPUSD fell from 1.4004 in Asia to 1.3886 in NY due to soft January GDP data and pre-weekend profit-taking. January GDP fell 2.9% m/m better than forecast but worse than December’s 1.2% m/m increase. Manufacturing production and Industrial production reports were also soft. A 40% drop in exports to the EU in January also put Brexit in a negative light. However, the uptrend line from November is intact while prices are above 1.3830.
USDJPY traded with a bullish bias in a 108.51-109.16 range. Higher Treasury yields underpinned prices.
AUDUSD and NZDUSD tracked broad US dollar sentiment and were on the defensive overnight.
The US Michigan Consumer Sentiment Index is expected to rise to 78.5 from 76.8 previously.
Today’s Suggested Range USD/CAD: 1.2410 – 1.2555