Canadian Dollar Update, April 30, 2021 – Canadian Dollar Ends April up 2.4%
USD/CAD Open: 1.2277-81, Overnight Range: 1.2270-1.2287, Previous Close: 1.2280
WTI Oil is at $63.49 and gold is at $1,768.80. US markets are lower today.
For today, USD resistance is at 1.2312. Support is at 1.2263.
• Canadian dollar enjoys April gains
• Eurozone GDP confirms technical recession
• US dollar opens mixed after subdued overnight session
The Canadian dollar traded in a narrow range overnight and opened in NY unchanged from Thursday’s closing level. FX traders are cautious due to month-end portfolio rebalancing flows and due to subdued global equity trading activity.
Yesterday US Q1 GDP grew 6.4% y/y, fueled by a 10.7% jump in consumption. The Bureau of Economic Analysis said, “In the first quarter, government assistance payments, such as direct economic impact payments, expanded unemployment benefits, and Paycheck Protection Program loans, were distributed to households and businesses.” The news underpinned 10-year US Treasury yields, which gave the US dollar a bid.
Risk sentiment became subdued after China official PMI at 51.1 missed the 51.7 forecast. Asia equity indexes closed with slight losses, and European bourses cannot get much traction.
US equity futures suggest a negative open on Wall Street.
The US GDP results contrasted sharply with today’s Eurozone GDP data. The Eurozone fell into a technical recession when Q1 GDP fell 1.8% y/y and 0.6% q/q. The results were not unexpected due to the slow vaccination roll-out and coronavirus lock-down measures. Eurozone inflation climbed 1.8%, but the gain is due to pandemic base effects and ignored. Nevertheless, the data weighed on EURUSD, which fell from 1.2126 to 1.2079 in NY trading.
GBPUSD dropped alongside EURUSD losses because of profit-taking and broad US dollar demand. GBPUSD managed to gain 0.99% in April, but it is the worst-performing G-10 major currency. The reason was new EURGBP demand as the Eurozone vaccine roll-out improved, and lock-down measures started to ease. The short term GBPUSD outlook is positive, above 1.3880, supported by a series of better than expected UK economic data recently, including robust Retail Sales and Service PMI indicators.
USDJPY snapped its April downtrend on Monday, and prices climbed to 109.20 from 107.98. A surge in Treasury yields fueled the gains.
Prices have been consolidating those gains above 108.50 since Wednesday’s FOMC meeting.
AUDUSD and NZDUSD price action mirrors US dollar sentiment. The New Zealand dollar outperformed AUD and CAD in April. The antipodean currencies benefit from the positive global growth outlook, but both currency pairs ignored the China PMI reports today.
Canada February GDP is expected to rise 0.5%. A better than expected result combined with expected USDCAD selling due to portfolio rebalancing demand could trigger additional USDCAD losses.
Today’s US data includes Personal Consumption Expenditures (PCE), Chicago PMI, and Michigan Consumer Sentiment.
Today’s Suggested Range USD/CAD: 1.2230 – 1.2330