Canadian Dollar Update, May 19, 2020 – Canadian Dollar flexing its muscles
USD/CAD Open: 1.3936-40, Overnight Range: 1.3873-1.3969
WTI Oil is at $31.69 and gold is at $1,744.20. US markets are mixed today.
For today, USD resistance is at 1.3913. Support is at 1.3851.
• Risk sentiment bolstered by German/France bond stimulus plan
• Oil prices soar on reports of higher gasoline usage
• President Trump escalates his feud with WHO
The Canadian dollar is on a tear, perhaps invigorated by the Victoria Day long weekend. USDCAD dropped 0.0200 points, falling from 1.4109 at Friday’s close to 1.3909 in Toronto, as the currency pair rode the coat-tails of a sweeping G-10 major currency rally against the US dollar. The Canadian dollar rally got an additional boost from oil prices.
West Texas Intermediate soared over 38% since May 11. Oil price gains continue to be supported by last weeks API and EIA crude inventories data showing US inventories dropped. Oil traders expect the easing of coronavirus lockdown restrictions will stimulate demand, which was evident after US gasoline usage increased by 2 million barrels per day, since April. OPEC crude production cuts alongside Saudi Arabia’s previously announced reduction of June output continue to support prices.
Traders want risk sentiment to be positive and see the easing of COVID-19 restrictions in many European, American, and Canadian jurisdictions as a step in the right direction. Reports from many regions that the number of new coronavirus cases continues to fall were encouraging. Wall Street traders jumped all over a report about positive early results from testing of a COVID-19 vaccine which sent the Dow Jones Industrial Index soaring, yesterday.
French President Emmanuel Macron and German Chancellor Angela Merkel announced they support a proposal for a €500 billion EU bond, to help revitalize the Eurozone economy which has been ravaged by the COPVID-19 pandemic. The plan is not a done deal with Sweden, Denmark, Austria, and Netherlands opposed to the so-called corona bond. Nevertheless, EURUSD rallied rising from 1.0802 yesterday to 1.0975 in early Toronto trading. The single currency got a bit of added support after the German ZEW Economic Sentiment survey surprised with a reading of 51 in May compared to 28.2 in April.
GBPUSD extended last week’s losses when it opened in Asia, yesterday. Prices were under pressure following adverse reports about the UK and EU trade talks. However, those concerns were alleviated somewhat when the British government announced plans to release a draft of their negotiation stance this week.
Traders ignored today’s UK employment report.
Treasury Secretary Steven Mnuchin and Fed Chair Powell’s testimony before the Senate Banking Committee today will be closely watched. Traders will also take direction from Wall Street.
Today’s Suggested Range USD/CAD: 1.3890– 1.3990