Canadian Dollar Update, April 19, 2021 – Canadian Dollar Hoping for Budget Bounce
USD/CAD Open: 1.2475-79, Overnight Range: 1.2473-1.2527, Previous Close: 1.2508
WTI Oil is at $63.40 and gold is at $1,770.30. US markets are lower today.
For today, USD resistance is at 1.2564. Support is at 1.2495.
• Canada Government to table first budget in over two years
• Bank of Canada monetary policy meeting Wednesday
• US dollar under pressure again
The Canadian dollar broke the 80 cent ceiling overnight, but the gains were driven by external factors. US dollar sellers came out of the woodwork and the greenback slid against the G-10 majors.
Fed Chair Jerome Powell and his colleagues have successfully pushed back against concerns that rising US inflation would force the Fed to raise interest rates well ahead of schedule. 10-year Treasury yields which were at 1.753% at the end of March are trading at 1.583% today. That slide knocked USDJPY 110.70 April 5 to 108.10 today.
USDCAD fell from 1.2635 March 30 to 1.2475 overnight, and it may have further to fall due to negative US dollar sentiment and steady to firm oil prices.
The Federal government will table Canada’s first budget in over two years at the close of business today. Back in the day, the FX market punished governments with massive budget deficits by selling the currency. Not any more. The latest budgets from a number of G-10 countries showed huge deficits and traders didn’t even blink. The coronavirus pandemic gave policymakers a green-light to spend and spend. That suggests tonight’s budget will not be a factor for FX traders.
Russia appeared to up the ante in the Ukraine. Tensions are already elevated because of the Russian military build-up along the Ukraine border and now the Russia Navy sent to ships into the Black Sea. That news may have weighed on US bond prices, but was ignored in FX markets.
Asia equity indexes closed with gains except for Australia’s ASX200, and Japan’s Nikkei 225 which were close to unchanged. European bourses are mixed and Wall Street futures are modestly lower. Oil and gold prices extended Friday’s rally and Oil prices inched lower.
EURUSD climbed from 1.1941 to 1.2041. Thursday’s ECB monetary policy meeting is expected to be a non-event. The short term technicals are targeting 1.2110.
GBPUSD rallied from 1.3811-1.3900 due to broad US dollar weakness and hopes for a robust economic rebound. A decisive break above 1.3910 to targets 1.4010.
Today’s Suggested Range USD/CAD: 1.2470 – 1.2570