Canadian Dollar Update, March 8, 2021 – Canadian Dollar Under Pressure
USD/CAD Open: 1.2683-87, Overnight Range: 1.2625-1.2698, Previous Close: 1.2657
WTI Oil is at $64.79 and gold is at $1,678.30. US markets are mixed today.
For today, USD resistance is at 1.2700. Support is at 1.2612.
• Oil prices surge after missile strike on Saudi production facility
• Global equity indexes mixed – Asia down, Europe higher
• US dollar opens on firm footing
The Canadian dollar traded firmer at the Asia open, alongside gains in AUDUSD and NZDUSD. The positive sentiment was driven by news that the US Senate passed President Biden’s $1.9 trillion COVID-19 Relief bill, setting the stage for final approval on Tuesday. China’s better than expected trade data supported the commodity currency rally.
China’s trade surplus soared, rising to $108.25 billion, fueled by a 60.6% y/y increase in exports. The gains did not last because US Treasury yields started climbing, knocking equity markets lower, and boosting the US dollar.
News that Yemeni rebels fired missiles at a Saudi Aramco production facility gave West Texas Intermediate (WTI) a boost, but the move was short-lived. Nevertheless, prices continue to be underpinned by OPEC and Russia’s decision to delay increasing production quotas. Saudi Arabia also agreed to leave its voluntary 1.0 million barrel per day production cut unchanged. Prices continue to be supported by investment bank forecasts suggesting oil prices will continue to rise.
Asia equity markets closed with losses except for Australia’s ASX 200 index. China’s Shanghai Shenzhen CSI 300 index plunged 3.47%. European traders ignored the Asia price action, and the major equity indexes are in positive territory, except for the UK FTSE 100, which is flat.
The Canadian dollar is suffering due to the Fed’s failure to protest against higher treasury yields and continued fall-out from Friday’s robust US employment report.
EURUSD dropped from a 1.1931 peak in Asia to 1.1858 in NY trading. The latest Commitment of Traders report shows long EURUSD positions continue to be trimmed. The single currency is under pressure due to widening US and EU interest rate differentials and bearish sentiment because of the EU’s poor COVID-19 vaccination performance. Also, the EURUSD technicals are bearish. The break below 1.1950 and then 1.1900 sets the stage for steeper losses to 1.1730.
GBPUSD is the best performing major G-10 currency and the only one to post a gain against the US dollar at today’s NY open. UK data and upbeat sounding comments from Bank of England Governor Andrew Baily are underpinning prices.
There are no notable US or Canadian economic reports due today, suggesting that FX direction will be determined by Treasury yields and equity price action.
Today’s Suggested Range USD/CAD: 1.2630 – 1.2730