Canadian Dollar Update, January 11, 2021 – Canadian Dollar Sinks
USD/CAD Open: 1.2768-72, Overnight Range: 1.2693-1.2835
WTI Oil is at $51.64 and gold is at $1,830.30. US markets are lower today.
For today, USD resistance is at 1.2913. Support is at 1.2730.
• US/China tensions unnerve markets
• White House drama continues today
• Rising US Treasury yields lift US dollar
The Canadian dollar traded sharply lower overnight and opened in Toronto at its lowest point. The Loonie came under pressure along with the other commodity bloc and the G-10 major currencies as risk sentiment soured on several concerns.
The US political drama will intensify today if US Democrat House Leader Nancy Pelosi delivers on her promise to impeach the President if Vice-President Mike Pence doesn’t use the 25th Amendment to the US Constitution to remove Trump first. He probably won’t, and the rest of the drama is merely noise.
What isn’t noise is the latest actions by the out-going administration to antagonize China. President Trump has been aggressively taunting Beijing since he lost the election. He ordered Chinese stocks to stop trading in the US and shut down the use of eight Chinese apps.
However, those tensions will likely dissipate on January 20 when Joe Biden takes office. He is on record for keeping the status quo in US/China relations over Taiwan.
The US dollar is getting additional support from Treasury yields, and putting the squeeze to short dollar positions, in the process. US 10-year Treasury yields have soared from 0.919% the day before the Georgia Senate run-off vote to 1.112% today. That’s because President-Elect Joe Biden’s party controls both the Senate and the House, allowing him to move forward with his agenda. That agenda includes plans new stimulus spending.
Traders were also concerned that the over 484,000 new coronavirus cases reported in the US on the weekend would delay the anticipated US and global economic rebound. The Canadian dollar was collateral damage when traders turned risk-averse.
The Bank of Canada quarterly Business Outlook Survey is released today. It should not have much bearing on the Canadian dollar. The latest COVID-19 surge and lock-down measures across Canada will colour the outlook.
Today’s Suggested Range USD/CAD: 1.2730 – 1.2830