Canadian Dollar Update, April 8, 2021 – Canadian Dollar Steady in Quiet Trade
USD/CAD Open: 1.2610-14, Overnight Range: 1.2591-1.2626, Previous Close: 1.2609
WTI Oil is at $59.52 and gold is at $1,756.00. US markets are mixed today.
For today, USD resistance is at 1.2625. Support is at 1.2559.
• FOMC minutes confirm dovish Fed bias
• US equity futures consolidating at highs
• US dollar opens with tiny losses, nearly unchanged vs EUR and CAD
The Canadian dollar sank, then rallied overnight, as traders searched for direction, and opened in NY nearly unchanged. The currency continues to be torn between US dollar demand due to the upbeat outlook for the American economy compared to Europe and Canadian economic fundamentals that support the Canadian dollar.
The Canadian dollar is tracking EURUSD moves but supported by improving domestic fundamentals. The intraday USDCAD technicals are bearish below the 1.2630-50 area, looking for a break below 1.2550 to extend losses to 1.2450.
The minutes from the March 17 FOMC meeting confirmed what Fed Chair Jerome Powell has been saying which is a rate hike is in “no time soon.” The minutes showed that Mr. Powell’s view was shared by the entire Committee. “All members agreed to maintain the target range for the federal funds rate at 0 to ¼ percent, and they expected that it would be appropriate to maintain this target range until labor market conditions had reached levels consistent with the Committee’s assessments of maximum employment and inflation had risen to 2 percent and was on track to moderately exceed 2 percent for some time.”
EURUSD bounced around in a 1.1862-1.1892 range. The topside was capped because the FOMC minutes did not give any reasons to incite a global “risk-on” rally. Eurozone and German data were not impressive. EURUSD gains are capped by interest rate differentials between the US and EU, which favour the greenback. The EURUSD intraday technicals are bearish below 1.1910.
GBPUSD is recovering after touching 1.3720 overnight. News that the UK may achieve coronavirus “herd immunity” by Monday supported gains as did the better than expected UK Construction PMI data, which was 61.7 compared to 54.6.
USDJPY dropped from 109.89 to 109.22 in early New York trading. The dovish FOMC minutes and the drop in 10-year US Treasury yields below 1.65% is weighing on prices.
AUDUSD and NZDUSD traded quietly in tight bands with prices tracking broad US dollar sentiment. Weaker than expected New Zealand Business confidence data was ignored.
Fed Chair Powell is speaking (virtually) at an IMF function today. He is not expected to deviate from his US economic outlook. Weekly jobless claims data is also due.
Today’s Suggested Range USD/CAD: 1.2560 – 1.2660