Canadian Dollar Update, February 19, 2021 – Canadian Dollar Rallies
USD/CAD Open: 1.2635-39, Overnight Range: 1.2639-1.2712, Previous Close: 1.2679
WTI Oil is at $60.13 and gold is at $1,782.40. US markets are higher today.
For today, USD resistance is at 1.2653. Support is at 1.2575.
-Robust US data underpins global risk sentiment
-China returns from Lunar New Year holiday
-US dollar gives back some of yesterday’s gains
The Canadian dollar is riding the coat-tails of a broad US dollar sell-off against the major G-10 currencies. USDCAD dropped from 1.2744 on Wednesday to 1.2608, despite West Texas Intermediate oil prices plunging 5.7% in the same period.
Canadian dollar traders are also ignoring the negative economic impact from existing coronavirus lock-down measures in Ontario and Quebec and the extremely low numbers (compared to the UK and US) of people getting COVID-19 vaccines.
Canada Retail Sales data for December will underscore the economic damage to the economy from the pandemic. December Retail Sales are forecast to drop 2.6% m/m, Statistics Canada’s “flash” estimate. The data is stale, and the news is expected, which suggests Canadian dollar traders will ignore the results.
Elsewhere, the G-7 meets virtually today. Today’s meeting lacks all the drama of the meetings since 2017, which tended to be hijacked by a former reality TV host. According to the media, President Joe Biden will say America is returning to the Iran Nuclear treaty and the Paris Climate Accord.
EURUSD accelerated to 1.2144 from 1.2083 due to economic data and an easing of interest rate increase fears. Yesterday’s weaker than expected US jobless claims report coupled with Wednesday’s FOMC statement reaffirming their easy monetary policy stance overshadowed steady to firming US Treasury yields. Traders determined that if the Fed was not going to be forced into prematurely raising US rates, then it was time to jump back into “risk-on” trades. Eurozone and German data were slightly better than expected.
GBPUSD pushed above resistance at 1.4000 and are trading at 1.4017 in NY.
GBPUSD continues to benefit from the COVID-19 vaccine roll-out and better than expected Manufacturing PMI data.
Traders are also hopeful ahead of Prime Minister Johnson’s speech on Monday when he is expected to outline the removal of COVID-19 restrictions.
USDJPY dropped from 105.74 to 105.25 as fears of higher US interest rates faded with the weak jobless claims data. Comments by Fed officials about the need for accommodative monetary policy also helped.
AUDUSD shrugged off soft Retail Sales data and accelerated above a three year peak, climbing from 0.7760 to 0.7860. NZDUSD mirrored AUDUSD moves but to a lesser extent.
The US economic data is second-tier leaving equity markets and Treasury yields to dictate FX direction.
Today’s Suggested Range USD/CAD: 1.2590 – 1.2690