Canadian Dollar Update, June 1, 2020 – Canadian Dollar soars
USD/CAD Open: 1.3727-31, Overnight Range: 1.3583-1.3800
WTI Oil is at $34.77 and gold is at $1,752.40. US markets are higher today.
For today, USD resistance is at 1.3656. Support is at 1.3558.
• Upside surprise for China May PMI
• Reports of OPEC/Russia meeting this week underpin crude prices
The Canadian dollar soared overnight. Better than expected Chinese Caixin Manufacturing PMI data, and relief that President Trump’s press conference last Friday was more noise and hype, rather than substance sparked demand for the so-called “risk-assets.”
Asia Equity indexes closed with strong gains. European indices are higher except for the German Dax, which suffered on the back of weaker than expected domestic Manufacturing PMI. However, the rash of riots across the US, and reports that China ordered some state firms to pause purchases of US agricultural products, turned S&P futures negative.
Canadian dollar direction will be dictated by external events and not this week’s Bank of Canada meeting or employment report.
Wednesday’s BoC meeting will have little impact on USDCAD. Rates and policy will be unchanged, and there will not be a press conference, but there will be a change of governors.
Canada’s Labour Force Survey is expected to show a loss of 1 million jobs with an unemployment rate of 15%. USDCAD traders will likely ignore the results, as the currency pair direction continues to be directed by broad US dollar sentiment and oil prices.
The oil price rally is supporting the Canadian dollar. OPEC and Russia are reportedly meeting this week amidst reports they are planning to extend crude production cuts of 10.0 million barrels/day for another three months.
Thursday’s ECB policy meeting will be closely watched. Policymakers are expected to increase the size of the Pandemic Emergency Purchase Program (PEPP). However, EURUSD will continue to be supported by the European Union (EU) proposal for an €825 billion COVID-19 Relief Fund. The intraday EURUSD technicals are bullish above 1.1075. The overnight break of resistance at 1.1150 targets 1.1240. A move below 1.1060 suggests a retest of 1.0950 while leaving the May uptrend intact above 1.0905.
GBPUSD will track EURUSD moves for the most part but will be very vulnerable to rumours and reports about the EU/UK trade talks.
There is no shortage of economic data this week. However, the FX impact from the results will be minimal. Weak data will be attributed to measures implemented to combat COVID-19. The ECB meeting and NFP results will overshadow better than expected results.
Today’s Suggested Range USD/CAD: 1.3600– 1.3700