Canadian Dollar Update, April 1, 2022 – Canadian Dollar Steady ahead of US NFP
USD/CAD Open: 1.2484-88, Overnight Range: 1.2483-1.2525, Previous Close: 1.2507
WTI Oil is at $99.42 and gold is at $1,928.50. US markets are higher today.
For today, USD resistance is at 1.2537. Support is at 1.2489.
- US nonfarm payrolls forecast to rise 450,000
- Russia demands ruble payments for gas
- US dollar opens mixed, commodity bock outperforms
The Canadian dollar joined AUDUSD and NZDUSD in outperforming the other major G-10 currencies against the US dollar overnight due to steady, firm commodity prices.
West Texas Intermediate is well below its March peak of $128.90/barrel but at $100.65/b remains well-above its 2021 average price of $67.99/b.
The oil market has been roiled by Russia’s invasion of Ukraine and subsequent Russian oil bans by many G-20 nations, as well as Opec’s decision to not increase production. President Biden’s decision to release 1.0 million barrels per day from the Strategic Petroleum Reserve (SPR) is a step in the right direction but it is only 1.0% of the close to 100 million barrel per day of global oil consumption.
Yesterday Russia President Vladimir Putin announced that all energy shipments to “unfriendly countries” must be paid in rubles. So far, it is mostly bark and little bite. Two of Russia’s biggest customers, Germany, and Italy, believe they are exempt. That remains to be seen.
The Canadian dollar is holding its own in the face of geopolitical uncertainty. Thursday, Statistics Canada reported that the economy grew 0.2% in January, which was impressive considering it occurred during the Omicron outbreak. StatsCan is predicting the domestic economy will grow 0.8% in February.
The Canadian dollar will trade erratically in the face of shift global risk sentiment but remains in an uptrend.
Month-end and quarter-end portfolio rebalancing flows are mostly completed, and the FX focus shifted to nonfarm payrolls data. The US is expected to have added 450,000 jobs in March, the unemployment rate fall to 3.7% from 3.8%, while average hourly earnings rose 0.4% m/m. The latter is key as rising earnings implies wage-inflation and will reinforce calls for 0.50% rate hikes at the next two meetings.
EURUSD has been on the defensive since peaking at 1.1180 in Asia yesterday and traded in a 1.1043-1.1075 range overnight. Euro zone HICP inflation (prelim) rose 7.5% in March, substantially higher than February’s 5.9% increase. Higher energy prices accounted for 44.7% of the increase.
The intraday EURUSD technicals suggest a break of 1.1030 will extend losses to 1.0950.
GBPUSD traded in a 1.3114-1.3150 range, with prices garnering a modicum of support from EURGBP selling in the wake of Putin’s demand for ruble payments for energy shipments.
USDJPY is consolidating its March gains in a 121.70-122.76 range supported by a rebound in US Treasury yields and the BoJ’s failure to react to the weaker currency. The Tankan report was a tad softer than expected, which further supported prices.
AUDUSD and NZDUSD shrugged off Asia losses and rallied in Europe, supported by steady to firm commodity prices.
ISM Manufacturing PMI is expected to be a touch higher at 59, compared to 58.6 in March.
Today’s Suggested Range USD/CAD: 1.2450 – 1.2550