Canadian Dollar Update, March 11, 2022 – Canadian Dollar Gets a Lift

USD/CAD Open: 1.2767-71,  Overnight Range: 1.2756-1.2792,  Previous Close: 1.2769

WTI Oil is at $108.86 and gold is at $1,987.10. US markets are mixed today.

For today, USD resistance is at 1.2735. Support is at 1.2673.

• Today’s ECB meeting includes updated forecasts
• EURUSD rallies on profit-taking and short-squeeze
• CAD dollar underperforms vs commodity currency bloc

The Canadian dollar finally caught a bid and it opened in NY as the best performing G-10 currency since Thursday’s start.

USDCAD topped out at 1.2840 yesterday and tested support in the 1.2750 yesterday and again today.  The USDCAD slide is occurring even as West Texas Intermediate oil prices retreat from Monday’s $129.50 /barrel peak to $104.54/b overnight.  Despite the $25.00/b plunge, the Canadian dollar continues to be supported as oil supply disruptions from the Russian/Ukraine war leave prices at eight year highs.

Canada employment is expected to rise by 160,000 and the unemployment rate to fall from 6.5% to 6.2%.  The report should be a non-event as the gains are merely a partial recovery of the 200,000 jobs lost in January due to Omicron restrictions.  Any FX reaction will likely be fully reversed before the day is done as traders remain cautious due to the European conflict and ahead of next week’s FOMC meeting.

The FOMC meeting will be closely watched as the Fed is widely expected to announce a 0.25% rate hike, the first of six or seven.  US inflation rose 7.9% y/y in February, a forty-year high and well above January’s 7.5% increase which suggests the FOMC statement may be more hawkish than expected.

European bourses and S&P 500 futures climbed steadily, then soared following headlines stating, “there are certain positive shifts in talks with Ukraine.”  Putin reportedly said that “sanctions made Russia stronger in the past.”

EURUSD traded choppily in a 1.0961-1.1043 range overnight, with the top resulting from the Putin headlines.  Further EURUSD gains may be limited ahead of the weekend due to the Russian/Ukraine risks and next week’s FOMC meeting.

Yesterday, the ECB announced that it would speed up tapering and end bond purchases by the end of Q3 2022.  Analysts concluded that it meant ECB rate hikes would occur as soon as the summer and that underpinned EURUSD.

GBPUSD traded in a 1.3053-1.3119 range and didn’t get any benefit from today’s UK data dump.  January GDP rose a higher than expected 0.8% m/m, and Manufacturing and Industrial production reports beat estimates.

USDJPY soared to 117.05 from 116.15 due to the US 10-year Treasury yield rising to 2.018% and Putin’s comments unraveling more JPY safe-haven trades.

Michigan Consumer Sentiment (forecast 61.4) and another speech by President Biden are ahead.

Today’s Suggested Range USD/CAD: 1.2670 – 1.2770