Canadian Dollar Update, January 4, 2021 – Canadian Dollar hits 33 Month Peak
USD/CAD Open: 1.2672-76, Overnight Range: 1.2665-1.2798
WTI Oil is at $47.95 and gold is at $1,946.60. US markets are lower today.
For today, USD resistance is at 1.2817. Support is at 1.2751.
• Positive global economic outlook buoys risk sentiment
• Rising COVID-19 cases around the world ignored
• US dollar opens 2021 with losses
Welcome to 2021. The Canadian dollar closed 2020 with an upbeat tone and that theme continued on the first day of trading in 2021. It is not a Canadian dollar story, though. It is a post-pandemic, global economic rebound outlook that is turbo-charging risk sentiment, driving commodities, and commodity currencies higher.
Global financial markets are looking past soaring numbers on new coronavirus cases in various regions. German officials want to extend existing lockdown orders beyond January 10.
Greece announced a one-week lockdown, and Ireland raised its risk to Level 5. The number of new US COVID-19 cases averaged over 220,000 in the past week.
Canada is not unscathed. Canadian politicians are warning citizens to avoid unessential travel, but many believe the warnings are not applicable to them.
Asia equity indexes started the year on a positive note, led by a 3.96% gain in the Shanghai Shenzhen CSI 300 index. Japan’s Nikkei 225 index did not follow that move, and lost 0.69%, due to rumours that authorities would declare a State of Emergency in Tokyo because of soaring COVID-19 cases.
Traders are ignoring the political drama unfolding in the US. The Georgia “run-off vote” is Tuesday, and will determine which political party controls the Senate.
Traders are also alert for headlines coming out of today’s OPEC meeting, as some see a risk that the cartel could increase production above the 500,000 barrel/day expected. WTI prices have been choppy.
The minutes of the December 16 FOMC meeting will be released on Wednesday. Notably, it is the last meeting for the following Fed presidents: Philadelphia’s Patrick Harker, Dallas’ Robert Kaplan, Cleveland’s Loretta Mester, and Minneapolis’ Neil Kashkari. They are replaced by Charles Evans of Chicago, Mary Daly of San Francisco, Richmond’s Thomas Barkin, and Atlanta’s Raphael Bostic.
EURUSD rallied steadily overnight, climbing from a low of 1.2212 in Asia to 1.2300 in Europe.
Prices are hovering near the top of that range in Toronto, supported by firmer equity prices and positive risk sentiment.
There are not any US or Canadian economic reports of note available today.
Today’s Suggested Range USD/CAD: 1.2670 – 1.2800