Canadian Dollar Update, March 1, 2021 – Canadian Dollar Rally Hits Wall
USD/CAD Open: 1.2679-83, Overnight Range: 1.2677-1.2735, Previous Close: 1.2745
WTI Oil is at $61.56 and gold is at $1,735.90. US markets are higher today.
For today, USD resistance is at 1.2704. Support is at 1.2629.
The Canadian dollar rallied from the opening bell in Asia and continued to do so throughout the overnight session. USDCAD closed Friday at 1.2745 and is trading at 1.2677 in Toronto today. It is the best performing of the major G-10 currency pairs.
Prices are supported by West Texas Intermediate (WTI) oil prices which have been steady over $60.00/barrel. Oil traders are looking ahead to the OPEC plus Russia meeting on Thursday. OPEC believes the previous production cutting measures have returned production and demand back into balance. The International Energy Agency is forecasting that the post-pandemic global economic rebound will increase crude demand and easily absorb the higher crude volumes.
The Canadian dollar is also getting a bit of support from expectations for robust US economic growth as Canada trade benefits from higher US demand.
Global risk sentiment improved modestly after the US House approved President Biden’s $1.9 trillion stimulus package. There is still work to do, but the Democrats control the Senate, which suggests the bill will pass.
The Reserve Bank of Australia (RBA) pushed back against rising yields.
It doubled the size of regularly scheduled bond purchases, which may be a sign that other central banks will take similar actions. AUDUSD traded higher until Europe opened, then prices retreated. Traders are cautious ahead of the RBA meeting Tuesday if the central bank complains about the level of AUDUSD after its February rally.
EURUSD traded in a 1.2029-1.2100 range. Traders ignored an uptick in Manufacturing PMI to 57.9 in February. The data is at its highest reading in over 3 years. German inflation rose 1.6% y/y in February. ECB President Christine Lagarde is expected to reiterate that the economy needs substantial monetary support in a speech later today.
GBPUSD is trading at the bottom of its 1.3923-1.3998 range. Traders are cautious ahead of Wednesday’s UK budget announcement and ignored today’s Manufacturing PMI report. GBPUSD continues to be supported by its vaccine roll-out, which suggests the country will not need any restrictions by the end of June.
USDJPY remains underpinned by firm US 10-year Treasury yields, which are hovering around 1.44%.
US ISM manufacturing PMI data and speeches from two Fed officials are the highlight for today.
Today’s Suggested Range USD/CAD: 1.2630 – 1.2730