Canadian Dollar Update, April 15, 2021 – Canadian Dollar Takes Flight
USD/CAD Open: 1.2491-95, Overnight Range: 1.2479-1.2527, Previous Close: 1.2519
WTI Oil is at $63.39 and gold is at $1,766.50. US markets are higher today.
For today, USD resistance is at 1.2561. Support is at 1.2523.
• Improving risk sentiment sinks US dollar
• US Retail Sales expected to rise 5.9% m/m
• Commodity currencies outperform
The Canadian dollar chewed through support overnight. USDCAD dropped through 1.2500 to test 1.2479 before inching back to 1.2490. The Canadian dollar is a beneficiary of a jump in crude oil and other commodity prices in a mildly risk positive environment.
Global equity indexes continue to grind higher and making new record highs daily. European bourses are modestly higher, and S&P 500 futures suggest a positive open on Wall Street.
West Texas Intermediate (WTI) oil prices climbed to $63.44/barrel overnight from a low of $60.58. The rally was sparked by the Energy Information Administration (EIA) reporting a 5.9 million barrel drop in US crude inventories.
Increased geopolitical tensions underpin gold prices. The US is planning sanctions against Russia for the perceived meddling in the US election and cyber attacks. The EU is planning sanctions because of Russia’s troop buildup along the Ukraine border. The US and China are squabbling after President Biden sent an unofficial delegation to Taiwan.
FX markets are ignoring the geopolitics and concentrating on the Fed interest rate outlook. Fed Chair Jerome Powell and his colleagues appear to have squashed bond trader efforts to boost Treasury yields after repeatedly insisting that monetary policy will remain unchanged “for some time.”
US Retail Sales are the main focus in a data-heavy economic calendar. March Retail Sales are expected to rise 5.9% m/m compared to the 3.0% drop in February. A substantial upside surprise could reignite inflation fears, especially if weekly jobless claims are lower than the expected 700,000.
Better than expected Australian employment data gave the Australian dollar a boost and indirectly supported the Canadian dollar, as both currencies are part of the commodity bloc.
EURUSD rejected an attempt to trade above 1.2000 and retreated to 1.1963. back to 1.1968. Prices are supported by reduced risks of higher US interest rates and broad US dollar weakness. Traders are also looking ahead to a late summer post-pandemic economic boom. German March CPI at 2.0% y/y in was not a factor.
There are plenty of US economic reports in addition to Retail Sales. They include Philadelphia Fed Manufacturing Survey, Industrial Production, Capacity Utilization, Business Investment, and NAHB Housing Market Index.
The Canadian Manufacturing Sales report is also due.
Today’s Suggested Range USD/CAD: 1.2470 – 1.2570