Canadian Dollar Update, February 10, 2021 – Canadian dollar on a roll
USD/CAD Open: 1.2695-99, Overnight Range: 1.2677-1.2709, Previous Close: 1.2693
WTI Oil is at $58.69 and gold is at $1,842.03. US markets are mixed today.
For today, USD resistance is at 1.2704. Support is at 1.2656.
-Shrinking US crude inventories lifts WTI oil prices
-Fed Chair Jerome Powell speech today
-Canadian dollar rebounds off of resistance
The Canadian dollar met resistance and then retreated. USDCAD dropped from a closing level of 1.2693 but ran out of steam at 1.2677, then bounced to 1.2709 in early NY trading. The move is entirely due to the Antipodean currencies’ behaviour, which also retreated from their best levels.
Nevertheless, it is still a US dollar story, and that story is “Sell.” US dollar bears are in control as the “reflation trade” gathers momentum, thanks to Biden, COVID-19 vaccines, and a dovish Federal Reserve.
President Joe Biden’s $1.9 trillion COVID-19 Relief plan and the COVID-19 vaccines are the turbo-charge driving positive risk sentiment. Global equities have rallied steadily, and gold and oil prices are higher. The US dollar is under pressure across the board.
The number of new coronavirus cases in the US has plummeted. On January 8 there were 255,798 cases reported: yesterday just 108,321. Also, 10% of the American population has received at least one dose of the vaccine.
Fed Chair Jerome Powell addresses the Economic Club of New York today.
There is some debate as to whether the equity market gains and the Biden stimulus plan will make him alter his “low rates for a long time” stance. It won’t. He just reiterated that the time to raise rates “isn’t anytime soon”, and it is unlikely that he changed his mind in just two weeks.
EURUSD traded cautiously in a 1.2110-43 range, as traders were wary about resistance in the 1.2150 zone. There is a sharp discrepancy between COVID-19 and vaccines in Europe compared to America, and it is Europe that is behind the curve. The US is easing restrictions and vaccinating citizens while the European Union is still struggling with outbreaks. Germany is considering extending lockdown measures until March 14. German inflation data was as expected and ignored.
GBPUSD bulls are relentless. The currency climbed from 1.3565 on February 4 and touched 1.3855 today, before slipping to 1.3835. The short term technicals are warning that a correction is overdue.
US January CPI is expected at 1.5% y/y for headline and core, and it will not have any impact on FX markets.
The Canadian dollar will continue to take direction from broad US dollar moves.
Today’s Suggested Range USD/CAD: 1.2650 – 1.2750