Canadian Dollar Update, June 10, 2020 – Canadian Dollar higher ahead of Fed
USD/CAD Open: 1.3400-04, Overnight Range: 1.3370-1.3428
WTI Oil is at $38.20 and gold is at $1,730.10. US markets are mixed today.
For today, USD resistance is at 1.3471. Support is at 1.3348.
• Canadian dollar consolidation continues
• Oil prices fall on report of US crude inventory increase
• OECD forecasts Canada 2020 GDP to fall 8.0%
The Organization for Economic Cooperation and Development (OECD) appears to be in the pessimistic camp. They predicted that Canada’s 2020 GDP would fall 8.0% if there is only one round of COVID-19. A second outbreak would knock another 1.4% off the GDP rate, bringing it to -9.4%. They do not have high expectations for an economic rebound either. They noted, “The rebound will not be dynamic enough for output to attain pre-COVID-19 levels by the end of 2021 under either scenario.”
Canadian dollar traders did not react to the OECD report. They are tracking US dollar sentiment, and at the moment, that sentiment is bearish, which is supporting the currency.
The OECD didn’t mince words about the global economic outlook, describing it as “highly uncertain,” and predicting a 6.0% drop in global GDP for 2020 They said ”The COVID-19 pandemic is a global health crisis without precedent in living memory. It has triggered the most severe economic recession in nearly a century and is causing enormous damage to people’s health, jobs and well-being.”
The OECD report was a distraction for traders who were largely sidelined ahead of today’s FOMC meeting. Traders may be overly cautious as most expectations are that the Fed leaves interest rates and policy unchanged. Last week’s stellar US nonfarm payrolls report gives them room to keep their “wait and see” approach.
Oil prices tumbled after the American Petroleum Institute (API) released their weekly crude inventories report. US crude stocks rose 8.4 million barrels in the week ending June 5. West Texas Intermediate (WTI dropped from $39.05/barrel on Tuesday to $37.75 today.
The increase in supply follows news that US Shale producers are reopening wells which may offset the latest OPEC production cut extension.
Today’s Suggested Range USD/CAD: 1.3350– 1.3450
By Admin | June 10, 2020 | Daily Update |
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