Canadian Dollar Update, April 27, 2021 – Canadian Dollar Keeping Gains
USD/CAD Open: 1.2409-13, Overnight Range: 1.2391-1.2417, Previous Close: 1.2393
WTI Oil is at $63.03 and gold is at $1,771.90. US markets are mixed today.
For today, USD resistance is at 1.2417. Support is at 1.2395.
• Firm oil price outlook helps underpin Loonie
• BoC Governor Macklem appears before House Finance Committee
• US dollar ekes out small gains
The Canadian dollar consolidated yesterday’s gains in a quiet overnight session. The US dollar inched higher against the major G-10 currencies except for the Swiss franc, which was unchanged. Equity traders were cautious. Asia equity indexes closed mixed to lower, while European bourses are posting slight losses. S&P 500 futures are a tad higher, suggesting a positive open on Wall Street.
The Canadian dollar outperformed its commodity currency bloc peers, and it may get additional support from Bank of Canada Governor Tiff Macklem’s remarks to the House of Commons Finance Committee. The BoC chief is unlikely to deviate from his comments at last week’s Monetary Policy Report press conference. At that time, he suggested that domestic economic outperformance meant Canadian interest rates would rise sooner than previously expected. Instead of sometime in 2023, the next rate increase would be in the second half of 2022.
That statement drove Canada to the front of the line as the BoC would be the first G-10 central bank to raise interest rates in the post-pandemic era.
Expectations are low for Wednesday’s Federal Open Market Committee (FOMC) meeting. Fed Chair Jerome Powell and colleagues are likely to leave interest rates and monetary policy unchanged as they maintain their wait and see approach.
Mr. Powell continues to be very concerned that the unemployment rate does not accurately reflect the real US jobs picture and has stated that interest rates will remain low until the Fed’s employment mandate is achieved.
USDJPY rallied as US 10-year Treasury yields inched higher. The Bank of Japan monetary policy meeting today did not offer any surprises. The BoJ left interest rates and monetary policy unchanged as well as the Yield Curve Control (YCC) target of 0.0% for Japanese Government bonds (JGB’s). The BoJ noted that risks were skewed to the downside.
EURUSD traded in a 1.2058-88 range with prices at the top of that band in early NY trading.
The single currency is supported by hopes for an economic rebound as the EU slowly reopens its economy. However, gains may be capped on fears of higher US interest rates due to rising inflation. The Eurozone economic data calendar was empty.
US data Housing Price Index, S&P/Case-Shiller Home Prices and Consumer Confidence are on tap today.
Today’s Suggested Range USD/CAD: 1.2360 – 1.2460