Canadian Dollar Update, August 3, 2021 – Canadian Dollar Retreats
USD/CAD Open: 1.2511-15, Overnight Range: 1.2460-1.2524, Previous Close: 1.2504
WTI Oil is at $70.26 and gold is at $1,814.10. US markets are mixed today.
For today, USD resistance is at 1.2641. Support is at 1.2487.
– Oil price plunge sinks Loonie
– US 10-year Treasury yields under pressure
– US dollar opens mixed: JPY outperforms, and CAD underperforms
The Canadian dollar is the worst performing G-10 major currency since Friday’s NY opening, losing 0.59% against the US dollar. The losses were driven by a steep plunge in oil prices, and also due to a bit of safe-haven demand for US dollars on delta-variant coronavirus fears.
West Texas Intermediate dropped from $74.20/barrel on Friday to $70.65/b yesterday. Traders feared that spreading outbreaks of the coronavirus would disrupt the global economy and reduce crude demand even as Opec raised production.
Traders were also cautious following the slide in 10-year US Treasury yields from 1.261% on Thursday to 1.15% yesterday. Weaker than expected US ISM Manufacturing PMI data helped undermine prices. Prices bounced to 1.19% today, supported by comments from Fed Governor Christopher Waller. He said if the next two jobs reports come in as strong as the last one, “then I think you’ve made the progress you need. In my opinion, that’s substantial progress and I think you could be ready to do an announcement in September.”
The Canadian dollar direction is at the mercy of US dollar sentiment.
Traders are focused on the Fed and whether officials will announce a tapering program sooner, rather than later. Friday’s US employment report is expected to show the US economy added 900,000 jobs.
Canada is expected to have added 100,000 jobs in July.
European investors drove the major equity indexes to new record highs, led by a 0.93% gain in the French CAC index. Wall Street futures are higher as well.
Oil prices are firmer while gold is trading lower. US 10-year Treasury yields are at their overnight session high of 1.195%.
The Chinese government continues to turn the screws on investors under the guise of risk management. Tencent (the world’s largest video games publisher) shares dropped over 10% after official media described online gaming as “spiritual opium.”
EURUSD chopped about in a 1.1860-1.1895 since Mondays open. The single currency could not sustain upside momentum from modestly higher than expected Eurozone Manufacturing PMI, partly due to concerns that spreading delta-variant coronavirus cases will derail the global economic rebound.
AUDUSD jumped from 0.7328 Monday to 0.7407 today, after the Reserve Bank of Australia (RBA) policy meeting was more dovish than expected. Traders were short AUDUSD expecting the RBA to delay tapering plans because of the latest coronavirus outbreaks and lockdown measures. They didn’t. The RBA will taper QE purchases in September, as previously announced.
The US and Canadian economic calendars are light.
Today’s Suggested Range USD/CAD: 1.2480 – 1.2580