Canadian Dollar Update, February 16, 2021 – Canadian dollar near a three year peak
USD/CAD Open: 1.2631-35, Overnight Range: 1.2612-1.2690, Friday Close: 1.2690
WTI Oil is at $59.81 and gold is at $1,823.17. US markets are mixed today.
For today, USD resistance is at 1.2730. Support is at 1.2679.
• Canadian dollar slips, but still firmer this week
• Asia markets are subdued because of Chinese New Year holidays
• Bitcoin posting new record highs
The Canadian dollar is trading near a three-year peak. USDCAD closed on Friday at 1.2690 and touched 1.2611 today, with a spike in West Texas Intermediate (WTI) oil prices, contributing to the slide. The US dollar is under pressure against the G-10 majors and opened in New York with losses across the board.
WTI oil surged to $60.92/barrel yesterday as a massive, nasty winter storm roared through Texas, across most of the US and a large part of Canada. Power-outages across Texas also shut down oil refineries and drilling rigs, which led to the spike in crude prices. Prices have already retreated from the top.
The greenback is being sold due to expectations of a post-pandemic global economic recovery, and ongoing hopes for a massive US stimulus package. However, the US dollar may find a bid thanks to rising US Treasury yields which are trading at 1.25% in NY. Bond traders are concerned about rising inflation, but the Fed continues to push back against that view. Fed Chair Jerome Powell and colleagues say that any increase in inflation is temporary. Markets hope for more clarity on the issue tomorrow when the minutes from the January 27 FOMC meeting are released.
EURUSD climbed from 1.2114 in Asia, Monday to 1.2167 in Europe, on the back of broad US dollar weakness and better than expected German ZEW Survey results.
The press release said “Economic Sentiment increased again considerably in the current February 2021 survey, climbing 9.4 points to a new reading of 71.2 points compared to January”. ZEW President Achim Wambach said “The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months. Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations.”
GBPUSD extended its February gains again, rising from Friday’s closing rate of 1.3854 to 1.3950 in Europe before sliding to 1.3913 in NY trading. GBPUSD continues to benefit from global investment flows and expectations for a robust economic recovery, thanks to their COVID-19 vaccination program’s effectiveness.
USDJPY is chopping about around the 200-day moving average at 105.53. Prices are underpinned by rising US Treasury yields.
The minutes from the February 2, Reserve Bank of Australia monetary policy meeting, did not do anything to impact AUDUSD, leaving it to rally on the back of US dollar weakness.
There are not any top-tier economic data releases in Canada or the US today.
Today’s Suggested Range USD/CAD: 1.2610 – 1.2710