Canadian Dollar Update, July 21, 2021 – Canadian Dollar Rallies
USD/CAD Open: 1.2683-87, Overnight Range: 1.2672-1.2728, Previous Close: 1.2681
WTI Oil is at $70.25 and gold is at $1,805.00. US markets are higher today.
For today, USD resistance is at 1.2575. Support is at 1.2542.
• Improving risk sentiment lifts Canadian dollar
• WTI oil recovers from its low
• US dollar opens with mixed tone
The Canadian dollar found a floor yesterday, and traded with a bullish bias overnight. The rally occurred in tandem with rising US Treasury yields, rebounding oil prices, and higher stock markets.
West Texas Intermediate (WTI) oil found a floor at $65.00/barrel yesterday, and managed to grind out gains, reaching $68.18/b overnight. The WTI retreat from last Wednesday’s peak of $75.37 followed news that Opec agreed to raise production by 400,000 barrels per day August 1, and that Opec agreed to a higher base production quota for the UAE. In addition, the spreading coronavirus delta variant outbreaks raised concerns that global growth would slow and so would crude demand. WTI prices slid and the break below $70.00/b triggered stop loss selling. The Canadian dollar dropped with crude prices.
Wall Street rallied on Tuesday and recovered all Monday’s losses, which set the risk tone overnight. Asia and European equity indexes are sharply higher. Wall Street is poised to open with gains.
EURUSD is hovering around the 1.1770 support area. Traders are awaiting Thursday’s pivotal ECB meeting. The central bank will announce the outcome of their policy review with expectations that they will reinforce their dovish outlook, stressing the need for ongoing accommodative monetary policy. EURUSD is also under pressure from recent flooding, and delta variant COVID-19 outbreaks. EURUSD technicals are bearish below 1.1850 looking for a test of 1.1700.
GBPUSD traded in a 1.3593-1.3641 range, with a negative bias following the move below support at 1.3740. Renewed coronavirus restriction fears due to rising delta variant cases have undermined GBPUSD. Traders are also concerned about increased tensions between the UK and EU over the Northern Ireland border. The technical picture is bearish with a move below 1.3560 targeting 1.3500.
USDJPY is near the top of its 109.81-110.17 range. The gains are supported by the rebound in US 10-year Treasury yields from a low of 1.14% to 1.247% in NY, while lingering safe-haven demand flows, and bearish technicals limit the topside.
AUDUSD dropped from 0.7339 to 0.7291 after June Retail Sales were worse than expected, falling 1.8% m/m (consensus forecast 0.5% decline). The news was quickly forgotten as global equities rallied and risk sentiment improved.
There are no economic reports today, suggesting Wall Street will drive FX direction.
Today’s Suggested Range USD/CAD: 1.2530 – 1.2630