Canadian Dollar Update, July 29, 2021 – Canadian Dollar Soars
USD/CAD Open: 1.2466-70, Overnight Range: 1.2454-1.2528, Previous Close: 1.2522
WTI Oil is at $73.37 and gold is at $1,830.20. US markets are higher today.
For today, USD resistance is at 1.2462. Support is at 1.2416.
• Benign FOMC meeting sparks US dollar sell-off
• Eurozone data gives EURUSD a lift
• US dollar opens weaker against all G-10 majors
The Canadian dollar soared following the FOMC meeting. The Fed left interest rates and quantitative easing (QE) unchanged, which was widely expected. The Fed did not shed any light on the start of tapering, but a statement tweak, highlighted below, suggests they are getting closer.
“Last December, the Committee indicated that it would continue to increase its holdings of Treasury securities by at least $80 billion per month and of agency mortgage‑backed securities by at least $40 billion per month until substantial further progress has been made toward its maximum employment and price stability goals. Since then, the economy has made progress toward these goals, and the Committee will continue to assess progress in coming meetings.”
It wasn’t enough for US dollar bulls, and they sold US dollars against the majors, with the Australian and New Zealand dollars leading the pack.
Canadian dollar traders ignored the weaker than expected domestic inflation data released yesterday.
Canada CPI rose 0.3% m/m in June compared to the consensus forecast for a 0.4% m/m increase. The data is skewed as Statistics Canada updated the weightings to better account for spending habits during the pandemic era.
Nevertheless, the results downgraded near term inflations risks.
Overnight, the major Asian equity indexes rallied, helped by reports Chinese regulators were extolling the virtues of domestic capital markets, and saying they would allow Chinese companies to go public. A 3.30% gain in Hong Kong’s Hang Seng Index led Asian equity indexes higher.
European bourses are also in positive territory, but gains have been modest. Wall Street is poised to open on a mixed note. DJIA futures have gained 0.30%, while S&P 500 futures are unchanged. Oil and gold prices rallied, and US 10-year Treasury yields at 1.263% are above their 1.225% session low.
USDCAD popped to 1.2600 when the FOMC statement was released then dropped steadily until finding a bottom at 1.2454 in Asia. The short term technical outlook flipped to bearish with the move below support in the 1.2510-30 area, with a break below 1.2405 targeting 1.2305.
Today’s US data includes weekly jobless claims and US Q2 GDP. The GDP forecast is a robust 8.6%. which may reopen the debate that the economy has peaked.
Weekly jobless claims are expected at 380,000.
Today’s Suggested Range USD/CAD: 1.2416 – 1.2516