Canadian Dollar Update, April 23, 2020 – Canadian Dollar hangs on to overnight gains
USD/CAD Open: 1.4146-50, Overnight Range: 1.4010-1.4198
WTI Oil is at $18.00 and gold is at $1,757.00. US markets are higher today.
For today, USD resistance is at 1.4156. Support is at 1.4024.
• Oil rebounds after Trump threatens Iran
• Weak UK and Eurozone PMI data weighs on GBPUSD and EURUSD
• Traders cautious ahead of US Jobless Claims data
The Canadian dollar soared, sank, then rose again in a lively overnight FX session. The currency tracked crude oil price action as well as antipodean currency price movements. Traders ignored yesterday’s disappointing Canadian inflation report.
Canada March CPI fell 0.6%, mainly due to the steep slide in oil prices. Even worse, Stats Canada said that most of the data was collected before the lockdowns got into full-swing, suggesting an even uglier result next month.
The data was not much of a factor for traders. Oil price movements had their attention.
The Energy Information Administration (EIA) reported that US crude inventories climbed by 15.02 million barrels in the week ending April 17. The news was ignored and overshadowed by Trump’s threat aimed at Iran. He tweeted ““I have instructed the United States Navy to shoot down and destroy any and all Iranian gunboats if they harass our ships at sea.” West Texas Intermediate jumped 48% since yesterday morning, rising from $10.90/barrel to $16.11 in Asia. Prices are steady in early Toronto trading as traders expect additional support when the 10 million barrel/day OPEC/Russia production cuts take effect on May 1st.
Eurozone economic data and ECB actions are weighing on EURUSD. German and Eurozone April Manufacturing PMI was weaker than expected.
UK Services and Manufacturing PMI data was extremely weak. Services PMI plunged to 12.3 from 34.5 while Manufacturing PMI dropped to 32.9 from 47.8. A Bank of England official warned that the economic contraction was worse than anything seen in several centuries.
AUDUSD rallied when Australian trade data showed a surge in exports, mainly to China. Prices climbed to 0.6369 from 0.6284. The currency pair was also supported by an uptick in global risk sentiment after Wall Street closed with gains, yesterday. However, S&P futures are flat today with traders waiting for the US Jobless Claims report.
Jobless Claims are expected to increase by 4.2 million, which risks another bout of risk aversion trading. On the other hand, the results shouldn’t surprise anyone, suggesting that a negative reaction will be short-lived. Canadian dollar price action will be driven by US dollar sentiment.
Today’s Suggested Range USD/CAD: 1.4050 – 1.4150