Canadian Dollar Update, July 30, 2021 – Canadian Dollar Recoups July Losses
USD/CAD Open: 1.2438-42, Overnight Range: 1.2449-1.2471, Previous Close: 1.2429
WTI Oil is at $73.79 and gold is at $1,826.70. US markets are lower today.
For today, USD resistance is at 1.2507. Support is at 1.2432.
• Eurozone data underpins EURUSD
• Global equity indexes under pressure
• US dollar opens on the defensive, poised to end the month with losses
The Canadian dollar recovered all its July losses and opened in NY right around where it started the month on July 2. USDCAD opened the month in NY at 1.2431, rallied steadily until reaching 1.2805 on July 19, then retreated until opening today at 1.2440, a 6.0% move including travel time.
A downgraded Bank of Canada 2021 growth forecast, a steep drop in crude oil prices, and a bout of negative global risk sentiment propelled USDCAD to the top. Those concerns faded in the latter part of the month. Oil prices rebounded, risk sentiment improved, and the FOMC decision led to widespread US dollar selling and the USDCAD went along for the ride.
Global equity markets were in retreat overnight. Disappointing earnings from Amazon (as if $7.8 billion in income in 3 months is bad) and the hangover from China’s stock market crackdown, fueled global equity market weakness, while month-end portfolio rebalancing flows and Eurozone data undermined the US dollar.
Asia equity indexes closed with losses, led by Japan’s Nikkei 225 index, which is down 1.80%. European bourses are red, as the UK FTSE 100 and Germany’s DAX index dip 0.88%. Wall Street futures point to a negative open. WTI oil prices are a tad softer at $73.33/barrel, while gold is almost unchanged at $1828.54.
EURUSD climbed to 1.1908 from 1.1876. Prices were supported after Eurozone GDP rose 2.0% q/q, beating the forecast of a 1.5% q/q increase, despite issues from the coronavirus delta strain. However, weaker than expected German GDP data (actual 1.5% q/q vs forecast 2.0% q/q) took the bloom off the rose. July CPI topped the ECB target, rising to 2.2% y/y (forecast 2.0%y/y), while unemployment fell to 7.6% from 7.8%.
GBPUSD rallied from 1.3936 to 1.3982, continuing its string of higher tops. GBPUSD technicals are bullish above 1.2850 and gaining additional support with a break above the 100 day moving average at 1.3921.
US data includes Personal income and Spending and PCE inflation.
Canada May GDP is expected to have dropped 0.3%, the same as in April. The weakness is due to the third-wave coronavirus outbreak, which suggests June’s result will be better.
Canadian markets are closed Monday for a holiday.
Today’s Suggested Range USD/CAD: 1.2430 – 1.2530