Canadian Dollar Update, April 5, 2022 – Canadian Dollar Grinds Higher
USD/CAD Open: 1.2455-59, Overnight Range: 1.2445-1.2491, Previous Close: 1.2488
WTI Oil is at $100.88 and gold is at $1,924.40. US markets are lower today.
For today, USD resistance is at 1.2497. Support is at 1.2480.
- Equities ignoring Fed-speak warning of 0.50% rate hikes
- RBA meeting expected to end with hawkish statement
- US dollar squeezes higher compared to Friday’s open
The Canadian dollar is grinding higher, continuing the trend from yesterday.
The Canadian dollar benefits from broad US dollar weakness as other G-10 central banks begin to follow in the Fed’s hawkish footsteps.
The Reserve Bank of Australia pivoted hawkishly. They left the Overnight Cash Rate (OCR) unchanged at 0.10% as expected but issued a hawkish statement. In February they wrote that “the Board is prepared to be patient as it monitors how the various factors affecting inflation in Australia evolve.” They are no longer patient.
Many Australian banks are forecasting multiple rate hikes in 2022. Governor Philip Lowe does not appear nearly as aggressive. Still, AUDUSD soared on the news, rising from 0.7538 to 0.7638.
The RBA statement led to a New Zealand Bank forecasting that the Reserve Bank of New Zealand (RBNZ) would hike rates 0.50% in May.
The Canadian dollar got a bit of a boost from rebounding oil prices. West Texas Intermediate (WTI) climbed from $98.50/barrel on Monday to $105.57/b today. The gains followed renewed speculation that the EU would sanction Russian energy exports after President Biden accused Vladimir Putin of war crimes.
The sanctions are far from a “done-deal”. Russian gas is too important to the German economy to be embargoed and the German officials said gas sanctions were off limits. The politicians are all for verbally supporting Ukraine, but none want to harm their domestic economies.
Asia markets were quiet due to holidays in China, Hong Kong, and Taiwan. Japan’s Nikkei 225 and Australia’s ASX 200 closed with small gains. European bourses are trading in negative territory as are Wall Street equity futures. Gold prices dipped while Treasury yields climbed.
EURUSD ended its March uptrend with yesterday’s breach of 1.1000. Eurozone Services PMI data and comments from ECB policymaker Klaas Knot were ignored with prices on the defensive due to the Russia/Ukraine war.
GBPUSD traded mixed in a 1.3108-43 range, supported by EURGBP selling and robust Services PMI data.
USDJPY rallied alongside rising US Treasury yields and is near the top of its 122.38-122.99 range.
The US data calendar has ISM Services PMI data, but traders are awaiting the FOMC minutes due Wednesday.
Today’s Suggested Range USD/CAD: 1.2400 – 1.2500