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Canadian Dollar Update, May 20, 2020 – Canadian Dollar tracking Wall Street

USD/CAD Open: 1.3908-12, Overnight Range: 1.3867-1.3960

WTI Oil is at $33.45 and gold is at $1,749.80. US markets are higher today.

For today, USD resistance is at 1.3908. Support is at 1.3848.

• Wall Street gains support Canadian dollar
• US crude inventories seeing draw-downs, underpinning WTI prices
• FOMC minutes likely to be a non-factor for markets

The Canadian dollar was up and down like the proverbial roller-coaster in the past 24 hours. Traders are taking their cue for direction from US equity markets and crude price action. Domestic influences continue to take a back-seat to the global risk outlook and broad US dollar sentiment.

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On Tuesday, US Treasury Secretary Steven Mnuchin and Fed Chair Jerome Powell appeared before the Senate Banking Committee. Their messages were mixed.

Mr. Mnuchin reiterated the over $3.0 trillion in fiscal stimulus measures that the Trump administration implemented to combat the impact of the COVID-19 outbreak. He also said that the government expects “economic conditions to improve in the third and fourth quarters.” He preferred to take a wait and see approach before implementing any more fiscal stimulus.

Mr. Powell took a different approach. He wanted the government to ramp up spending even further. However, he added that the Fed was prepared to act further, if necessary.

Fickle traders were on full display on Wall Street. Monday, they bought stocks on hopes that Moderna Therapeutics would be able to deliver a COVID-19 vaccine. Tuesday, they decided the vaccine hopes were too optimistic and sold stocks.

Bank of Canada Deputy Governor, Timothy Lane, is speaking about “Policies for the Great Global Shutdown and Beyond.” Any Canadian dollar reaction to his remarks may be short-lived as it is US dollar sentiment that is driving the currency.

Oil prices got a boost at the end of the day when the American Petroleum Institute reported that US crude inventories fell 4.5 million barrels in the week ending May 15. Reported increases in gasoline usage, and the easing of lockdown restrictions in major urban centers around the world, has underpinned prices on expectations of rising demand.

NZDUSD was the best performing G-10 currency overnight. Reserve Bank of New Zealand Governor Adrian Orr said that he is prepared for negative rates, but if so, it won’t happen until a lot later. That was music to the ears of NZDUSD traders who lifted the currency pair from 0.6065 to 0.6136

Canada CPI is released today and expected to drop 0.6% m/m in April due to low oil prices.

Today’s Suggested Range USD/CAD: 1.3860– 1.3960

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By KBFX | May 20, 2020 | Daily Update | 0 comments