Canadian Dollar Update, April 5, 2021 – Canadian Dollar Grinding Higher
USD/CAD Open: 1.2560-64, Overnight Range: 1.2550-1.2593, Friday Close: 1.2577
WTI Oil is at $60.10 and gold is at $1,725.40. US markets are higher today.
For today, USD resistance is at 1.2568. Support is at 1.2493.
• FX liquidity is poor due to Easter Monday holidays
• Better-than-expected US employment data boosts global recovery outlook
• US dollar lower in early trading
The Canadian dollar is grinding higher in early Toronto trading. FX volumes are significantly reduced because of holidays around the world. Australia, New Zealand, most of Europe, and the UK were closed Friday and again today for Easter Monday. China and Hong Kong markets were shuttered for national holidays.
Friday, the USD released a stellar employment report. Nonfarm payrolls rose 916,000 in March compared to the forecast for a 647,000 gain. The NFP results for January and February’s data were revised higher as well. Economists expect a similar result for April, and if the trend continues for the rest of the year, the Fed may be forced to raise interest rates far earlier than they expect.
The pace of coronavirus vaccinations in the US, combined with the massive stimulus spending announcements, is expected to fuel a robust, consumer fueled economic recovery, which will help lift the global growth outlook.
Oil prices have slipped from last week’s peak but are still relatively firm, with West Texas Intermediate at $60.10 today. Prices are on the defensive after OPEC announced gradual production increases starting in May, while Saudi Arabia will phase out their voluntary production cut. Prices continue to be supported by hopes for a global economic rebound.
EURUSD is trapped in a 1.1700-1.1800 range. The single currency is suffering from bearish sentiment due to widening EU and US interest rate differentials. Prices are further undermined by the EU’s bungled vaccine roll-out and the latest COVID-19 outbreak, leading to restrictions in many regions. The ECB is adamant for the need for ultra-easy monetary policy to support the economy, while recent US data suggests the US economic recovery is gathering steam.
AUDUSD remains under pressure after falling from 0.7840 in the middle of March. The drop in commodity prices, including iron ore, and China’s hostile trade actions against some Australian imports weigh on the currency pair. The RBA monetary policy meeting is Tuesday. Prices traded in a 0.7618-0.7640 since Thursday’s close.
Traders expect today’s US data to reaffirm the economic recovery outlook. ISM Services PMI, and factory orders are on tap.
Today’s Suggested Range USD/CAD: 1.2510 – 1.2610