Canadian Dollar Update, April 27, 2020 – Canadian Dollar steady
USD/CAD Open: 1.4054-58, Overnight Range: 1.4039-1.4117
WTI Oil is at $12.25 and gold is at $1,727.30. US markets are higher today.
For today, USD resistance is at 1.4107. Support is at 1.4029.
• Economy reopening anticipation keeps risk sentiment positive
• Bank of Japan leaves rates unchanged, but adds to QE
• Oil prices weighed down by storage concerns
The Canadian dollar rallied alongside the rest of the G-10 major currency pairs overnight, supported by gains in the Australian and New Zealand dollars. AUDUSD climbed steadily, rising from 0.6384 to 0.6468, while NZDUSD rose to 0.6074 from 0.6013.
Global FX risk sentiment stayed positive. China reported that the Wuhan hospitals had discharged the last COVID-19 patient and that country is starting to reopen. Italy announced plans to slowly reopen its economy.
West Texas Intermediate (WTI) oil prices dropped steadily, falling from $16.94/barrel at Friday’s Toronto close. Traders have discounted the massive 10 million barrels/day production cuts announced by OPEC and Russia two weeks ago, which begin May 1. They are more concerned with where the producers will store the existing production. Storage capacity limitations fueled last week’s price drop to negative $37.63/b price, and traders are worried that the June contract could face the same issues.
EURUSD traded higher supported by the ongoing unwind of coronavirus-fueled US dollar safe-haven trades. Traders are looking ahead to Wednesday’s Federal Open Market Committee (FOMC) meeting, and Thursday’s European Central Bank meeting. Expectations are low for both meetings due to previously announced initiatives.
GBPUSD rallied, rising from an Asia low of 1.2369 to a European peak of 1.2454. Positive risk sentiment around expected announcements about easing coronavirus restrictions underpinned prices. Prices drifted to 1.2420 in Toronto as UK Prime Minister Boris Johnson asked to “contain their impatience” about ending the lockdown, due to risks from a second wave of the outbreak.
The Bank of Japan is trying to deal with their COVID-19 outbreak. For the second meeting in a row, the BoJ reduced their 2020 growth forecast and increased monetary stimulus. The BoJ left rates unchanged but lowered the 2020 GDP forecast to -5.0% from -3.0% predicted at the last meeting. Also, they removed the cap on the amount of Japanese Government Bonds (JGB) they could purchase.
The Canadian dollar direction continues to be at the mercy of broad US dollar sentiment against the G-10 major currencies. There are not any notable US or Canadian economic reports to be released today.
Today’s Suggested Range USD/CAD: 1.4010 – 1.4110