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Canadian Dollar Update, April 21, 2020 – Canadian Dollar suffers from poor risk sentiment

USD/CAD Open: 1.4240-44, Overnight Range: 1.4113-1.4265

WTI Oil is at $1.31 and gold is at $1,680.20. US markets are lower today.

For today, USD resistance is at 1.4281. Support is at 1.4175.

• Oil price weakness sinks Loonie
• Global equity indexes are deep in the red – Wall Street may follow suit
• Europe still awaiting EU response to pandemic
• US dollar rises against G-10 currency majors

The Canadian dollar sank again overnight. Oil market disruptions sank global equity indexes as traders switched into risk aversion trades. That price action spooked equity traders. The Dow Jones Industrial Average closed yesterday down 2.44%. Asia and European traders followed suit. Japan’s Nikkei 225 lost 1.98%, while the German DAX is down 3.3% as of 8:30 am EDT. S&P equity futures are pointing to a negative open on Wall Street this morning.

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The oil price drama is a temporary panic due to an overabundance of supply, extremely low demand, exacerbated by crude storage constraints. WTI crude prices for delivery in September and October are around $27.50/barrel.

Parts of Europe and the US are making plans to ease COVID-19 containment restrictions while European Union leaders are just getting ready to discuss the EU’s fiscal response to the crisis. Their slow reaction is one factor that is weighing on EURUSD, which has dropped from 1.0995 on April 14, to 1.0818 today. German ZEW economic sentiment for April surged to 28.2 from -49.5 previously, but the data was ignored.

GBPUSD is suffering because of fears that the July 1 deadline to extend the UK Brexit transition beyond December 31, may come and go without an extension. Traders were also unnerved after UK February employment data showed unemployment was rising before the devastation of the pandemic.

AUDUSD suffered on the back of broad US dollar demand and comments by RBA Governor that Australia’s GDP contraction is the worst since the 1930s.

Today’s Suggested Range USD/CAD: 1.4190 – 1.4290

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By KBFX | April 21, 2020 | Daily Update | 0 comments