Canadian Dollar Update, February 22, 2022 – Canadian Dollar Remains in Tight Range
USD/CAD Open: 1.2730-34, Overnight Range: 1.2721-1.2767, Previous Close: 1.2751
WTI Oil is at $93.00 and gold is at $1,905.40. US markets are lower today.
For today, USD resistance is at 1.2754. Support is at 1.2716.
- Risk sentiment improves moderately
- Canada December Retail Sales expected to fall 2.1% m/m
- US dollar opens close to unchanged but down for the week
The Canadian dollar is a sea of tranquility amidst raging geopolitical storms. The currency drifted inside a relatively narrow range in a headline-driven market, which was partly because the US and Canada were closed on Monday.
Canadians were closely watching the Emergency Act debate in Parliament which continued even as the Emergency disappeared. Prime Minister Trudeau invoked the Emergency Act last week to combat protestors that closed down Ottawa. Trudeau claimed the act was needed to re-open borders blockaded by truck drivers, although the borders blockades had already been dispersed.
He then claimed the Emergency Act powers were needed to enhance the government’s powers to deal with the possibility that disgruntled Canadians would resume their protests. Even die-hard Liberal apologists like the Toronto Star disagreed with the government action, but to no avail.
The Emergencies Act was passed with a vote of 185-151 thanks to the support of NDP leader Jagmeet Singh and his party. The Conservative party gave a sigh of relief because if the Liberal vote failed, it would have meant another Federal election, and the Conservatives do not even have a leader.
Ukrainian citizens wished they could just have Canada’s problems. President Putin announced that Russia recognized two separatist areas of Ukraine as independent Republics and then dispatched peace-keeping troops into the areas.
Western governments were united in their outrage over Putin’s actions and promised a slew of new sanctions aimed at the new independent Republics.
The Russian news overshadowed China’s latest assault on technology companies. Beijing regulatory authorities demanded that banks report their exposures to Tencent and Ant. Hong Kong and mainland China stocks plunged.
EURUSD bounced in a 1.1284-1.1390 band since Friday’s close. Prices are underpinned by German and Eurozone economic data showing the Eurozone economy is rapidly recovering. Monday’s PMI data was mixed. Manufacturing PMI missed the consensus forecast while Composite and Services PMI exceed estimates. Today, the German Ifo Survey was also better than expected with the Business Climate Index rising to 98.9 from 96.0 in January.
GBPUSD gains from better than expected UK PMI data Monday topped out at 1.3637 Monday. Prices fell to 1.3547 in NY today due to comments from Bank of England officials and the Ukraine crisis.
USDJPY dropped to 114.51 with prices weighed down by soft 10-year Treasury yields and safe-haven demand for yen. The US 10-year Treasury yield plunged to 1.854% yesterday but has since rallied to 1.94%.
NZDUSD is underpinned ahead of an expected 0.25% rate hike from the RBNZ tomorrow. AUDUSD is supported by higher commodity prices.
US Consumer Confidence and S&P Case Shiller Housing Price data will be overshadowed by Russia headlines.
Today’s Suggested Range USD/CAD: 1.2680 – 1.2780