Canadian Dollar Update, March 24, 2022 – Canadian Dollar Riding Oil Bull
USD/CAD Open: 1.2575-79, Overnight Range: 1.2556-1.2584, Previous Close: 1.2561
WTI Oil is at $112.35 and gold is at $1,959.70. US markets are higher today.
For today, USD resistance is at 1.2550. Support is at 1.2516.
- Oil prices steady with a bullish bias
- Risk sentiment is cautiously positive
- US dollar opens narrowly mixed compared to Wednesday
The Canadian dollar inched lower and is trading near its overnight session low due to steady to firm commodity and oil prices.
The Canadian dollar continues to be an “after-thought” in global FX as traders are focused on broad-based US dollar sentiment. However, oil prices give the Canadian dollar a bit of insulation from bullish US dollar shocks.
West Texas Intermediate (WTI) oil focuses on retesting the $129.40 peak seen on March 7. Prices are underpinned by fears of a crude supply shortage if the EU follows the US lead and bans imports of Russian energy. To that end, President Biden is meeting with EU leaders to deliver a plan to replace Russian energy supplies with US natural gas and helium.
Iran is also a factor.
A successful conclusion to the Iran Nuclear talks could release another 4.0 million barrels/day of Iranian crude into the market, which would alleviate the pressure from a Russian oil embargo.
The parade of hawkish Fed officials continued yesterday. St Louis Fed President James Bullard said that “The Fed needs to move aggressively to keep inflation under control.” He is on board for a 0.50% rate increase at the May 4 FOMC meeting.” He also said that the Russia/Ukraine war would not have much impact on the US economy.
His comments did not worry Asian equity traders. The Australian ASX 200 and Japan’s Nikkei 225 index closed with modest gains while those in China finished with small losses. European bourses are trading on the defensive ahead of the US, EU, and NATO meetings today.
EURUSD bounced in a 1.0973-1.1013 range due to contradicting economic data and ECB comments. EU and German Markit Manufacturing PMI reports beat expectations at 57 and 57.6, respectively.
GBPUSD is consolidating losses and didn’t get much support from PMI data showing strong economic growth in March.
USDJPY climbed to 121.74 from 120.96 due to the rising 10-year US Treasury yield, which touched 2.40% in early NY.
AUDUSD traded with a bid in a 0.7468-0.7500 range, underpinned by higher commodity prices and AUDJPY demand.
Today’s US data includes Durable Goods Orders (forecast -0.5%), weekly jobless claims (forecast 212,000).
Today’s Suggested Range USD/CAD: 1.2500 – 1.2600