Canadian Dollar Update March 27, 2020 – Canadian Dollar ending week on strong note
USD/CAD Open: 1.4098-1.4102, Overnight Range: 1.3988-1.4154
Oil is at $21.70 and gold is at $1,620.40. US markets are lower today.
For today, USD resistance is at 1.4216. Support is at 1.4013.
• Canadian dollar boosted by widespread US dollar selling
• Fed Chair Powell warns US economy may already be in recession
It has been a great week for Canadian dollar bulls, even though the hometown currency gave back some gains overnight. The Canadian dollar rose 2.58% since the start of trading on Monday. However, those gains pale in the face of the $5.41% gains enjoyed by the Australian and New Zealand dollars.
Global market risk sentiment took a turn for the better following massive injections of liquidity by the major central banks alongside huge fiscal stimulus programs put into place by G-7 governments. The planned $2.3 trillion stimulus package in the US helped flip Wall Street stocks from bear markets back to bull markets. However, that move should be viewed sceptically. Overnight, the major equity indexes in Asia rallied led by the Nikkei 2254 which rose 3.88% supported by Thursday’s Wall Street gains. The positive sentiment didn’t carry forward into Europe.
The major indices are down sharply, as are S&P futures, which suggest a negative open on Wall Street today.
The US has 81,231 confirmed cases, surpassing the number in China. Globally, there are over 537,800 cases, and the death toll has reached 24,126. Today, UK Prime Minister Boris Johnson said he tested positive for COVID-19. Spain recorded its highest single-day death toll.
Despite that news, European Union officials have delayed implementing a coordinated EU fiscal response to the crisis, as the massive bureaucracy needs at least two more weeks to assess the situation.
Fed Chair Jerome Powell didn’t have any problems assessing the US economic outlook. Yesterday he said the US might already be in a recession. He added that he expected the decline in economic activity would be “pretty substantial.”
USDCAD traded in a 1.3992-1.4555 range this week, reaching the bottom of the band overnight following Thursday’s domestic and US stock market rallies. However, the ongoing Russia/Saudi Arabia oil price feud and the decimation of the Canadian oil industry, combined with the economic collapse from the coronavirus crisis, will limit USDCAD losses below 1.3990.
Unionized government employees, employed by Service Canada, have refused to work, citing health care concerns, which will severely impede access to benefits by unemployed taxpayers and worsen the COVID-19 hit to the economy.
Once again, today’s Canadian dollar direction will be subject to broad US dollar, and Wall Street moves.
Today’s Suggested Range USD/CAD: 1.4050 – 1.4150