Canadian Dollar Update, March 30, 2021 – Canadian Dollar Yields to Yields
USD/CAD Open: 1.2584-88, Overnight Range: 1.2583-1.2624, Previous Close: 1.2590
WTI Oil is at $60.35 and gold is at $1,683.50. US markets are mixed today.
For today, USD resistance is at 1.2661. Support is at 1.2610.
• US Treasury Yields climb
• Month-end, quarter-end flows distorting price action
• US dollar rallies against G-10 majors
The Canadian dollar is sinking. Month-end and quarter-end portfolio rebalancing flows and fresh “third-wave” coronavirus fears are stoking US dollar demand, and the Canadian dollar is caught in the cross-fire. A few economists believe the Bank of Canada will announce QE tapering at the April 21 policy meeting. If so, it may indicate Canadian rates are going higher sooner than expected. USDCAD technicals are bearish while prices are below 1.2650.
Wall Street closed on a mixed to weaker note which set the tone for Asia markets. China and Japanese equity indexes closed with gains while Australia’s ASX 200 dropped. The German Dax index is leading European equity indexes higher, while S&P 500 futures are in the red.
The surge in the US dollar has sent gold prices tumbling. Since yesterday, the shiny metal dropped $45 /ounce, fully erasing all the gains since June 2020. Oil prices are also suffering from US dollar strength but not to the same extent. WTI is trading at $60.35/barrel, down from its overnight peak of $62.23. Prices are supported by reports that OPEC will extend production cuts until May and expectations for a post-pandemic rebound in global demand.
EURUSD is trading at a five-month low. Widening EU/US interest rate differentials and an ultra-dovish European Central Bank are driving prices lower. The Eurozone’s ongoing coronavirus outbreaks and current lockdown measures sharply contrast with the US plan to have 200 million Americans vaccinated by the end of April. Traders ignored today’s better than expected ESI Confidence data.
GBPUSD is trading in a 1.3732-1.3782 range. Prices are supported by economic growth optimism from high numbers of UK vaccinations and the reopening of the economy. Upbeat comments by Bank of England officials are also underpinning prices.
USDJPY blasted above the psychologically important 110.00 level and reached 110.39. The move was fueled by the spike in US Treasury yields and Japanese year-end rebalancing flows. Japanese Retail Sales data was better than expected but still very weak.
AUDUSD and NZDUSD have been driven down by broad US dollar strength, but both currencies are off their worst levels.
US Consumer Confidence data is the only notable economic release today.
Today’s Suggested Range USD/CAD: 1.2550 – 1.2650