Canadian Dollar Update, March 24, 2020 – Canadian Dollar rally fades
USDCAD open 1.4493, Overnight Range 1.4374-1.4531
Oil is at $24.44 and gold is at $1,673.90. US markets are higher today.
The short-term USD/CAD technicals are neutral-bearish. For today, USD resistance is at 1.4574. Support is at 1.4459.
• USDCAD sinks then soars with WTI price action
• US government expected to announce a stimulus plan to combat impact of COVID-19
• In terms of oil, WTI jumps 4.5% then gives back the gains
The Canadian dollar entered rally mode overnight. It didn’t have anything to do with domestic issues but stemmed from an improvement in global risk sentiment. Spending packages will do that. Unfortunately, the overnight gains evaporated in early Toronto trading.
The Canadian government has stepped up to the plate to help support the domestic economy. The government announced new spending measures of around $85 billion to provide support to individuals and business impacted by the COVID-19 outbreak.
WTI rose from $23.72/barrel to $25.14/b before dropping to $24.05 in early Toronto trading. Oil prices rallied on hopes that the various fiscal and monetary stimulus plans announced by the G-10 finance ministers, and central bank governors would boost demand.
However, traders quickly realized that government ordered lockdowns in cities and regions around the world would sharply curtail travel and commuting, and demand for oil in the process. The Canadian dollar rally halted when WTI prices erased their overnight 4.5% gain.
The Canadian dollar underperformed when compared with the other commodity-bloc currencies. AUDUSD and NZDUSD extended yesterday’s gains with prices supported by a shift into risk-seeking assets, which sparked broad US dollar selling.
FX sentiment improved overnight, alongside rebounding equity markets in Asia and Europe. Asia traders ignored the weak market close on Wall Street and bought stocks. Japan’s Nikkei 225 index soared 7.10%. European indices followed Asia’s lead with the German Dax rising 6.4% as of 8:00 am EDT. S&P futures are up 4.6% after earlier triggering a “limit-up” circuit breaker.
Canadian dollar traders will be guided by Wall Street price action, and oil price moves, with all markets awaiting news on the US Stimulus package.
Today’s Suggested Range USD/CAD: 1.4440 – 1.4540