Canadian Dollar Update, April 1, 2021 – Canadian Dollar is no April Fool
USD/CAD Open: 1.2578-82, Overnight Range: 1.2559-1.2600, Previous Close: 1.2562
WTI Oil is at $61.38 and gold is at $1,729.30. US markets are higher today.
For today, USD resistance is at 1.2592. Support is at 1.2535.
• Global risk sentiment improves on Biden’s “once-in-a-generation” splurge
• Euro Area PMI data ignored, US ISM Manufacturing PMI, Jobless claims ahead
• US dollar opens steady to higher
The Canadian dollar rallied following yesterday’s better than expected January GDP data. The 0.7% m/m gain surpassed the forecast for a 0.5% increase. However, the Canadian dollar gains were due to sizeable month-end and quarter-end portfolio rebalancing flows. However, steady to higher oil prices, and hopes for spillover benefits from US stimulus initiatives, are supporting the Canadian dollar. In addition, some analysts believe the Bank of Canada’s April 21 monetary policy statement will be less dovish than previous ones, which is also supporting the currency.
Last night, President Biden announced plans for another US stimulus plan worth about $2.3 trillion, which is on top of the $1.9 trillion COVID Relief bill passed March 10, and the $900 Coronavirus bill on December 21.
The news underpinned global risk sentiment. Asia equity indexes closed higher led by a 1.24% gain in Hong Kong’s Hang Seng index, supported by Japanese and Chinese economic data. European bourses are trading with gains, and Wall Street is poised to open in positive territory. Gold and oil prices rose while 10-year Treasury yields are 1.718%
EURUSD is at the top of its overnight 1.1714-1.1742 range. Positive sentiment from hopes Biden’s latest spending plan boosts global economic growth is offset by ongoing COVID-19 issues in Europe.
France is locking the country down for a month and maintaining a curfew. EURUSD did not get any support from ECB Chief Economist Philip Lane. He said the near term economic outlook is uncertain and that the latest rise in inflation is all because of the pandemic shock. Euro area PMI data was better than expected but ignored. The short-term EURUSD technicals are bearish below 1.1760.
GBPUSD was steady in Asia, then dropped to 1.3748 in early Europe before rebounding to 1.3794 after better than expected UK Manufacturing PMI data (actual 58.9 vs forecast 57.9). That is the highest reading for the index since 2011. GBPUSD is trapped in a 1.3670-1.3850 range with a negative bias from the February downtrend line that comes into play at 1.3850.
US weekly jobless claims are forecast at 680,000, a small improvement from last week. ISM Manufacturing PMI is expected at 61.3 compared to 60.8.
The Easter long weekend means market liquidity will start evaporating rapidly just before lunchtime. A large swath of Europe and the UK, Australia and New Zealand are closed on Friday and Monday. Canada is closed Friday. US markets are wide open both days.
Today’s Suggested Range USD/CAD: 1.2530 – 1.2630