Canadian Dollar Update, March 2, 2021 – Canadian Dollar Awaits December GDP
USD/CAD Open: 1.2650-54, Overnight Range: 1.2640-1.2696, Previous Close: 1.2646
WTI Oil is at $60.59 and gold is at $1,734.90. US markets are lower today.
For today, USD resistance is at 1.2637. Support is at 1.2575.
-Risk sentiment is mixed
-Canada GDP data ahead
-US dollar grinds out gains
The Canadian dollar has had a topsy-turvy twenty-four hours. USDCAD prices bounced between 1.2697 and 1.2640 Monday and today. The direction is determined by risk sentiment.
Canadian dollar price action will mirror commodity bloc currency moves.
However, better than expected domestic December GDP data (forecast 0.3% m/m) may give the currency a bit of a lift.
Asia equity markets were whippy. They turned early gains into losses after they got spooked by comments from a Chinese Banking regulator. He expressed concern about a domestic housing bubble as well as bubbles in foreign markets. China’s Shanghai Shenzhen CSI index closed down 1.28%, and Japan’s Nikkei 225 index fell 0.86%.
European equity traders concern quickly evaporated. The major bourses were a tad lower early in the session, but all managed to rally, led by a 0.78% gain in the UK FTSE 100. Those moves reversed earlier US dollar gains.
Coronavirus concerns are rapidly disappearing, at least in the minds of FX traders. A World Health Official said it was premature to assume we will finish with the virus by year-end. Germany asks people not to travel during Easter, and officials are considering extending lockdown restrictions until March 28. EURUSD traders do not care.
EURUSD traded in a 1.1993-1.2050 range with the low seen in Europe.
Prices have climbed steadily since, in part because of the gains in European equity markets. German and Eurozone economic data was on the soft side.
Traders ignored comments from ECB policymaker de Guindos suggesting the ECB has the tools to pushback against rising yields.
GBPUSD dropped to 1.3860 overnight weighed down by the lingering impact from comments by a Bank of England official, and position adjusting ahead of Wednesday’s UK budget. BoE monetary policy committee member David Ramsden reminded markets that negative interest rates were in the toolbox Those comments were dismissed in UK trading today and GBP recovered all its losses, reaching 1.3930 in NY.
USDJPY shrugged off Asian safe-haven flows and rose from 106.74 to 106.95 with prices underpinned by steady to firm US Treasury yields.
The Reserve Bank of Australia left the official cash rate unchanged at 0.1%.
The statement reaffirmed that Australia interest rates would not increase until 2024 at the earliest. AUDUSD traded choppily in a 0.7735-0.7770 range until just before NY opened, when prices rallied to 0.7804.
There is not any top-tier US data released today.
Today’s Suggested Range USD/CAD: 1.2600 – 1.2700