Canadian Dollar Update, July 20, 2021 – Canadian Dollar Remains Under Pressure
USD/CAD Open: 1.2750-54, Overnight Range: 1.2735-1.2783, Previous Close: 1.2747
WTI Oil is at $67.32 and gold is at $1,809.20. US markets are higher today.
For today, USD resistance is at 1.2691. Support is at 1.2661.
• Falling oil prices weigh on Canadian dollar
• Risk sentiment sours as coronavirus delta-variant spreads
• US dollar opens with negative risk sentiment lifting JPY and CHF
The Canadian dollar is suffering from a global bout of negative risk sentiment, with sliding oil prices exacerbating the pain.
USDCAD soared from 1.2595 in Asia to 1.2805 in Toronto on Monday morning. It then consolidated the gains in a 1.2735-1.2785 range overnight, only to start today’s session almost unchanged from where it opened yesterday. The USDCAD technical picture is bullish. The move above the 200 day moving average at 1.2623 followed by the breach of major resistance at 1.2650 targets further gains to 1.2900.
Global risk sentiment took a turn for the worse on Monday. A surge in coronavirus delta-variant cases in many regions spooked equity traders and stock markets plunged. Wall Street closed deep in the red with the Dow Jones Industrial Average losing 726 points.
US 10-year Treasury yields collapsed. They were 1.304% on Friday and plunged to 1.177% Monday. Prices barely recovered overnight, and 10-year yields are at 1.185%
Asian equity markets followed Wall Street’s lead and traded deep in the red. That wasn’t the case in Europe. Bargain-hunters and profit-takers emerged to lift the major European indexes higher, with S&P 500 and DJIA futures following suit.
West Texas Intermediate (WTI) oil prices dropped 8.0% since Friday, and that plunge fueled USDCAD gains. Sellers emerged on concerns that the spread of the delta variant coronavirus would derail the global economic recovery and reduce oil demand, just as Opec increases production by 400,000 barrels per day, starting August 1.
EURUSD continued to consolidate recent losses, trading in an uninspiring 1.1773-1.1802 range. German PPI data was a tad softer (actual 1.3% vs May 1.5%) than previously, but not a factor. Traders are biding their time until Thursday’s ECB meeting.
GBPUSD dropped to 1.3629 from 1.3688 overnight and is down 0.68% from Monday’s NY open. Two Bank of England officials downplayed the risk that the BoE would raise interest rates soon.
AUDUSD and NZDUSD are trading near session lows. The RBA minutes did not reveal anything new but reminded traders that interest rates would remain unchanged until 2024. AUDUSD selling was exacerbated by spreading coronavirus cases and new lockdown measures.
Today’s US data includes Building Permits and Housing Starts.
Today’s Suggested Range USD/CAD: 1.2660 – 1.2760