Canadian Dollar Update, June 8, 2021 – Canadian Dollar Drifts with Positive Bias
USD/CAD Open: 1.2083-87, Overnight Range: 1.2078-1.2093, Previous Close: 1.2083
WTI Oil is at $70.01 and gold is at $1,896.00. US markets are mixed today.
For today, USD resistance is at 1.2126. Support is at 1.2106.
• FX traders sidelined, awaiting ECB and US Inflation
• Eurozone Q1 GDP revised higher
• US dollar opens mixed, and is trading sideways
The US dollar opened on a mixed note after a quiet overnight session. The Swiss franc outperformed, rising 0.27%, while the New Zealand dollar was the worst performer, losing 0.18% since yesterdays open. The Canadian dollar is unchanged.
Canadian dollar price action was subdued in overnight action, although the outlook is still positive, supported by firm crude prices. West Texas Intermediate (WTI) oil prices have retreated from yesterday’s peak of $69.97/barrel, but the dip was shallow and merely due to position adjustments ahead of Thursday’s US inflation data.
Oil prices are expected to reach $100/b in 2021 due to rising demand and shrinking supply.
The Canadian dollar continues to be underpinned by expectations for a robust economic recovery in Q2, fueled by pent-up consumer demand when the country fully emerges from lockdown restrictions.
The Canadian dollar received a boost in April after the Bank of Canada revised the timing for a rate hike from 2023 to H2 2022 and substantially upgrading its economic growth forecast. There are no surprises expected at tomorrows BoC meeting, mainly because there is no press conference scheduled. However, Deputy Governor Timothy Lane speaks Thursday and may provide more clarity on the BoC’s outlook.
Euro area equity indexes gave up some earlier gains following upwardly revised Q1 GDP data (actual -1.3% q/q vs 1.9%q/q). Some analysts suggest the improvement may force the ECB to begin tapering QE purchases ahead of schedule. That’s a bit of a stretch, as policymakers continue to stress the need for ample monetary policy accommodation.
EURUSD is drifting in a 1.2165-1.2195 range, trading with a slight negative bias after the single currency failed to hold gains above 1.2200. German ZEW data was mixed but still positive. Economic Sentiment decreased by 4.6 points to 79.8 points. By contrast, the assessment of the economic situation improved very significantly (actual – 9.1 points, vs 40.1 in the previous month). Traders are awaiting Thursday’s ECB meeting.
GBPUSD traded lower, falling from 1.4183 to 1.4131 due to broad US dollar strength. UK BRC like-for-like Retail Sales rose 18.5% in May compared to 39.6% in April.
USDJPY climbed from 109.21 to 109.55 after US 10-year Treasury yields inched higher. Q1 GDP was better than expected (actual -3.9 vs forecast -4.8%).
US and Canadian trade reports are ahead.
Today’s Suggested Range USD/CAD: 1.2040 – 1.2140