Canadian Dollar Update, March 11, 2021 – Canadian Dollar Gets A Boost
USD/CAD Open: 1.2576-80, Overnight Range: 1.2580-1.2623, Previous Close: 1.2620
WTI Oil is at $64.96 and gold is at $1,721.60. US markets are higher today.
For today, USD resistance is at 1.2646. Support is at 1.2540.
• US Congress passes $1.9 stimulus bill-finally
• ECB monetary policy statement expected to be dovish
• Canadian dollar lags commodity currency rally
The Canadian dollar extended yesterday’s gains in a “risk-on” overnight session. Congress finally passed President Biden’s $1.9 trillion stimulus package. The result was never really in doubt as the Democrats controlled the House and Senate.
USD 10-year Treasury yields dropped from 1.57% yesterday to 1.47% overnight. The slide occurred after the US 10-year note auction was well received. The drop in rates soothed jittery inflation nerves and the US dollar retreated.
The Bank of Canada left interest rates, monetary policy and the statement headline unchanged yesterday. The move was expected. They noted that: “GDP grew 9.6% in the final quarter of 2020, led by strong inventory accumulation. GDP growth in the first quarter of 2021 is now expected to be positive, rather than the contraction forecast in January. Consumers and businesses are adapting to containment measures, and housing market activity has been much stronger than expected. Improving foreign demand and higher commodity prices have also brightened the prospects for exports and business investment.”
But they weren’t happy. They countered the positive growth outlook by saying “Despite the stronger near-term outlook, there is still considerable economic slack and a great deal of uncertainty about the evolution of the virus and the path of economic growth. The labour market is a long way from recovery, with employment still well below pre-COVID levels.”
They are determined to stick to their view that inflation increases will be transitory. They said “CPI inflation is near the bottom of the 1-3 percent target band but is likely to move temporarily to around the top of the band in the next few months. The expected rise in CPI inflation reflects base-year effects from deep price declines in some goods and services at the outset of the crisis a year ago.”
Analysts are looking for clarification today when Deputy Governor Lawrence Schembri delivers a speech titled “Savings in the time of COVID-19, and the outlook for household spending,” at lunch.
EURUSD traded in a 1.1917 to 1.1968 range overnight with traders awaiting today’s ECB monetary policy meeting results.
GBPUSD traded quietly, with a bullish bias in a 1.3920 to 1.3962 range.
A speech by President Biden and US Jobless Claims data are the focus today.
Today’s Suggested Range USD/CAD: 1.2530 – 1.2630