Canadian Dollar Update, March 23, 2020 – Canadian Dollar infected by COVID-19
USDCAD open: 1.4438-43, Overnight range: 1.4357-1.4487
Oil is at $22.35 and gold is at $1,528.80. US markets are mixed today.
For today, USD resistance is at 1.4577. Support is at 1.4184.
• Short term USDCAD technicals are bullish looking for break above 1.4460 to extend gains
• Canadian dollar tracking oil price movements
• Coronavirus headlines fueling broad US dollar demand
• US Senate fails to pass coronavirus bill, unnerving markets
The Canadian dollar continues to derive direction from oil price action, coronavirus headlines, and Canadian and US government fiscal stimulus plans. The TSX lost 6.57% last week, but it was a better performance than the Dow Jones Industrial Average. The DJIA lost 4.55% Friday and finished the week with a 9.72% loss. Those stock market moves, oil price action, and fiscal stimulus actions bounced the USDCAD in a 1.4160 -1.4665 range during the week.
This week could be just as ugly if the Asia open is any guide. US equity futures hit limit down.
West Texas Intermediate (WTI) gapped lower. Prices dropped from Friday’s close of $23.66/barrel to $20.82/before rebounding. Russia and Saudi Arabia are continuing the price war. Russia reportedly balked at Saudi Arabia’s plan for additional production cuts to boost crude prices because cuts would benefit US Shale producers, at OPEC and Russia’s expense. The US producers are hurting because crude prices are well-below their break-even price of $40.00/b.
The Canadian dollar is collateral damage in the oil price war and prices plunged in Asia, alongside the crude price slide.
Oil price movements and coronavirus headlines will ensure there will not be a shortage of intraday FX volatility this week. There are over 330,000 COVID-19 cases globally.
The House of Commons reconvenes on Tuesday and is expected to pass all the dramatic measures announced last week. US lawmakers are in the same boat as Canada.
The Reserve Bank of New Zealand announced a $30 billion Large Scale Asset Purchase (LSAP) program, saying “The negative economic implications of the coronavirus outbreak have continued to intensify.” If the news was an attempt to inject some calm into markets, it backfired in FX.
NZDUSD dropped from 0.5677 to 0.5605. AUDUSD mirrored the kiwi move.
Today’s Suggested Range USD/CAD: 1.4390 – 1.4490