Canadian Dollar Update, June 8, 2022 – Canadian Dollar Gnawing at Resistance
USD/CAD Open: 1.2547-51, Overnight Range: 1.2527-1.2557, Previous Close: 1.2533
WTI Oil open at $121.32 and gold open at $1,849.66. US markets are lower today.
For today, USD resistance is at 1.2569. Support is at 1.2544.
- Surging US Treasury yields turn risk sentiment negative
- Australia’s central bank raises rates 0.50%
- US dollar opens strongly, JPY underperforms
The Canadian dollar is gnawing at resistance which is fitting for the currency of a country whose national animal is the beaver.
The Canadian dollar is garnering support from firmer oil prices, and the latest Organisation for Economic Cooperation and Development (OECD) forecast.
West Texas Intermediate (WTI) oil extended the June rally, rising from $111.80/barrel at the start of the month to $121.33/b overnight. The gains are due to anticipated supply disruptions from Russian oil embargos and renewed demand from China as it eases Covid restrictions. Traders dismissed yesterday’s American Petroleum Institute data showing weekly crude inventories rose 1.8 million barrels.
The OECD Economic outlook for June said that “Canada’s economy has largely recovered from the COVID-19 crisis.
The OECD said that Canada is shielded to some of the world growth shocks because of limited trade ties to the economies hit by the Russian and Ukraine war, and demand for commodities.
Canada fared well compared to the outlook for the global economy. The OECD downgraded their 2022 global growth forecast to 3.0% from 4.5%.
Treasury Secretary Janet Yellen told the Senate Finance Committee the US would face a prolonged period of high inflation. That isn’t news but her remarks still unsettled traders.
The 10-year Treasury yield consolidated earlier gains and remained above 3.0%.
The overnight session was rather choppy, mainly due to a lack of top-tier US data and caution ahead of Thursday’s European Central Bank meeting. The major Asian equity indexes closed with gains, but European bourses are all in negative territory. S&P 500 futures are trading quietly but are in the red.
EURUSD traded erratically in a 1.0672-1.0739 range, reaching the top after better than expected Eurozone GDP and employment data. Eurostat reported that GDP and employment climbed by 0.6%, in the first quarter.
GBPUSD traded defensively in a 1.2515-1.2596 range after weak UK data reminded traders of the fragility of the domestic economy.
USDJPY rallied to 134.13 from 132.61 after Bank of Japan Governor Haruhiko Kuroda reiterated the BoJ’s dovish monetary policy stance. Mr. Kuroda said, “Japan is absolutely not in a situation that warrants monetary tightening, as the economy is still in the midst of recovering from the pandemic’s impact.”
AUDUSD and NZDUSD traded with a negative bias due to the outlook for rising US interest rates.
The US economic calendar is very light.
Today’s Suggested Range USD/CAD: 1.2500 – 1.2600