Canadian Dollar Update, April 24, 2020 – Canadian Dollar extends rally
USD/CAD Open: 1.4074-78, Overnight Range: 1.4023-1.4114
WTI Oil is at $17.85 and gold is at $1,753.60. US markets are mixed today.
For today, USD resistance is at 1.4088. Support is at 1.4018.
• EURUSD and GBPUSD shrug off very weak economic reports
• EU Leaders meeting ends without an agreement on a recovery plan
• US Durable Goods Orders report due today
The Canadian dollar opened on a strong note this morning and then extended its gains in early Toronto trading.
Some of the rally is attributed to the rebound in West Texas Intermediate (WTI) oil prices from this week’s unprecedented negative $37.60/barrel low. However, at today’s $16.18/barrel level, WTI oil prices are too low to provide any last support to the Canadian dollar.
Crude prices are underpinned ahead of next week’s scheduled 10 million barrel/day production cuts agreed to by OPEC and Russia, which start May 1. The easing of COVID-19 restrictions in some US states and China is helping oil price sentiment.
EURUSD rebounded from its overnight session low of 1.0728 to reach 1.0805 in early Toronto trading after EU Chief Brexit negotiator Michel Barnier and UK Brexit Secretary David Davis gave a joint press conference. Mr. Barnier said, “a fair deal was possible.” EURUSD hit 1.0728 after German IFO Business Confidence survey results fell to record lows thanks to the coronavirus pandemic. The results were not unexpected, which is why prices rebounded so quickly.
EURUSD gains may be limited due to disappointment that the EU leaders were unable to agree on a recovery plan.
GBPUSD suffered a similar fate as EURUSD, except its damage was done by a weaker than expected Retail Sales report which showed March Sales dropping 5.1% rather than the -4% predicted.
Prices quickly recovered during the Barnier/Davis press conference.
USDJPY traded sideways in a quieter than usual Asia market as Australia and New Zealand markets were closed for ANZAC day. The Bank of Japan is rumoured to be considering removing its cap on government bond purchases.
Wall Street is poised to open with a small gain, helped by news that Trump will sign the latest $485 billion spending bill. US Durable Goods and Michigan Consumer Sentiment reports are due today. FX reactions to the data are likely to be short-lived as the focus continues to be on the coronavirus recovery. Canadian dollar price action is dictated by US dollar sentiment and not domestic issues.
Today’s Suggested Range USD/CAD: 1.4020 – 1.4120