Canadian Dollar Update, June 15, 2021 – Canadian Dollar Sinks as Oil Rises
USD/CAD Open: 1.2177-81, Overnight Range: 1.2132-1.2188, Previous Close: 1.2148
WTI Oil is at $71.77 and gold is at $1,861.20. US markets are mixed today.
For today, USD resistance is at 1.2210. Support is at 1.2150.
• US Retail Sales expected to drop 0.8% m/m in May
• Australia and UK announce free trade deal-UK farmers unhappy
• US dollar opens mixed, then firms in early NY trading
The Canadian dollar is on the defensive. Crude prices are rising, but the Canadian dollar is sliding as the focus shifts to this morning’s US data dump and Wednesday’s FOMC meeting. The Canadian dollar is tracking broad US dollar strength as positions get adjusted ahead of Wednesday’s FOMC meeting.
West Texas Intermediate (WTI) oil opened in NY, where it closed yesterday, but climbed steadily since, rising to $71.52/barrel. Oil prices are supported by ongoing speculation that the post-pandemic global economic recovery will increase crude demand. Oil price gains should help limit Canadian dollar losses.
The EU and US are putting an end to the Boeing and Airbus subsidy dispute, which led to punitive tariffs from both sides.
The UK announced a trade deal with Australia. UK Prime Minister Boris Johnson describes it as “Our new free trade agreement opens fantastic opportunities for British businesses and consumers, as well as young people wanting the chance to work and live on the other side of the world.” FX traders ignored the news.
Global equity indexes are higher, except those in China. Hostile G-7 rhetoric aimed at Beijing weighed on Chinese stock prices. European equities are at record highs, and Wall Street is poised to open in positive territory.
EURUSD traded in a 1.2115-1.2147 range overnight and is sitting at 1.2122 in NY. Traders ignored Eurozone economic data and dovish ECB-speak. German HICP inflation was 2.4% y/y, as expected while the Eurozone trade surplus narrowed in April. For today, EURUSD support is at 1.2090 while resistance is at 1.2150.
GBPUSD had a choppy overnight session. It rallied from 1.4106 at the close to 1.4127 at the European open, then dropped to 1.4073, just before the NY open. The UK unemployment slipped to 4.7%, as forecast, but the outlook is murky as furlough schemes end in September. The intraday GBPUSD technicals are bearish below 1.4130, looking for a break below 1.4070 to target 1.4000.
USDJPY rallied from 109.60 yesterday to 110.16 at the NY open, then retreated to 110.00. Prices are underpinned by firmer US Treasury yields and a report the BoJ may extend pandemic relief measures for another six months.
US Retail Sales, Producer Price Index, Industrial Production, and Capacity Utilization data are on tap.
Today’s Suggested Range USD/CAD: 1.2130 – 1.2230