Canadian Dollar Update, August 23, 2021 – Canadian Dollar Gets A Reprieve
USD/CAD Open: 1.2738-42, Overnight Range: 1.2736-1.2831, Previous Close: 1.2820
WTI Oil is at $65.42 and gold is at $1,806.20. US markets are higher today.
For today, USD resistance is at 1.2771. Support is at 1.2615.
• Global risk sentiment turns positive
• WTI oil prices jump 3.0% from Friday’s close
• US dollar gives back Friday’s gains
The Canadian dollar was at death’s door on Friday and is well on the road to recovery today. The fickle finger of risk sentiment is at play.
Friday, traders were in a tizzy due to fears of a coronavirus delta-variant global economic slowdown, even as the Fed moves up the date to start tapering QE purchases. Global equity indexes dropped, Commodity prices and the commodity currency bloc (which includes the Canadian dollar) plunged. The negative sentiment started to turn positive during Friday’s NY session, then got legs after comments from Dallas Fed President Robert Kaplan.
Mr. Kaplan, a noted hawk, suggested that if the spread of the delta-variant has a material effect on the economy, he would adjust his view for when to start tapering.
The US dollar is broadly lower as safe-haven trades were unwound. Friday’s risk aversion fears have morphed into Monday’s risk-on hopes. Global stock markets are all in positive territory as bargain hunters helped to boost prices.
Rising COVID-19 delta variant cases are a major issue in New Zealand and Australia. New Zealand reported 35 new cases and the Prime Minister extended the lockdown until at least Friday. Lockdowns are not being received favourably in parts of Australia. Protesters and police battled in Sydney and Melbourne. AUDUSD and NZDUSD traders didn’t care and both currencies rallied.
Oil bulls are happy. West Texas Intermediate, the North American benchmark price for oil rallied over 3.2% from Friday’s NY close to today’s peak. WTI climbed to $64.29/barrel from its close of 61.85/b. Geopolitical fears are fading, and the global growth outlook improved.
EURUSD rallied above its pivotal 1.1700 area, getting a bit of support from German and Eurozone PMI data. PMI results were a tad weaker than expected, but that was due to delta-variant COVID-19 concerns and supply bottlenecks. EURUSD rallied from 1.1694 to 1.1732.
GBPUSD climbed to 1.3688 from 1.3617 with mildly softer PMI reports not having any ill-effect on the currency. The gains are due to positive risk sentiment, and bullish technicals looking for a break above 1.3800 to lead to a test of 1.3770.
USDJPY climbed as US Treasury yields rose, and safe-haven trades were reversed. Improved risk sentiment powered AUDUSD and NZDUSD higher.
The US economic calendar has second-tier data while the Canadian calendar is empty.
Today’s Suggested Range USD/CAD: 1.2650 – 1.2750