Canadian Dollar Update, May 27, 2021 – Canadian Dollar Consolidates Losses
USD/CAD Open: 1.2109-13, Overnight Range: 1.2092-1.2140, Previous Close: 1.2125
WTI Oil is at $66.55 and gold is at $1,899.80. US markets are mixed today.
For today, USD resistance is at 1.2089. Support is at 1.2044.
• FX awaiting US Q1 GDP, Durable Goods Orders, Jobless Claims
• Fed Quarles suggests the “taper talk” should begin in coming months
• USD opens with gains compared to Wednesday’s opening levels
The Canadian dollar consolidated yesterday’s losses in a USDCAD range of 1.2104-1.2140 overnight, before dropping to 1.2092 in NY trading.
The overnight session was uneventful. The major Asia equity indexes closed modestly lower except for Australia’s ASX 200, which was unchanged. European bourses are mixed. The FTSE 100 is flat, the German DXA is lower, and the French CAC slightly higher. S&P 500 and DJIA futures are in negative territory. Gold and oil prices are trading with small losses. FX markets traded sideways.
Fed Vice Chairman Richard Quarles opined about tapering yesterday, saying, “If my expectations about economic growth, employment, and inflation over the coming months are borne out, it will become important for the FOMC to begin discussing our plans to adjust the pace of asset purchases at upcoming meetings.”
He didn’t say anything “taper-tantrum” worthy, but the US dollar caught a bit of a bid, anyway.
The US is flexing its trade muscle again, albeit sans the inflammatory tweets. Chinese Vice Premier Liu He and US Trade Representative Katherine Tai reportedly had an “honest, pragmatic, and constructive” discussion yesterday, according to China’s Ministry of Commerce. FX markets ignored the news.
The same can’t be said about the Canada and US trade dispute. “honest” and constructive” are terms missing as the Americans reopen the softwood lumber disputes and added dairy to the mix.
Traders are awaiting today’s US data dump. Q1 GDP is expected at 6.5%% q/q, with a risk of an upside surprise. The Durable Goods forecast is 0.7%, while weekly jobless claims are predicted at 425,000, down from 444,000 last week.
EURUSD drifted in a 1.2176-1.2214 range ahead of today’s US data. German GfK consumer confidence improved to -0.7 from -8.6, but was below the forecast of -5.2. ECB policymaker Pablo de Cos added his voice to the dovish chorus, saying the rise in inflation in the Euro area is inflationary.
GBPUSD traded in a 1.4093 to 1.4138 band, underpinned in part by sales of EURGBP. The UK is closed Monday due to the May 31 Spring Bank Holiday.
The Canadian dollar is undermined by new concerns around US/Canada trade. Steady to firm WTI oil prices are ignored. The bullish Canadian dollar outlook is stale. Expectations of a robust economic rebound sparked by pent-up consumer demand is reflected in current levels. The currency pair needs fresh incentives to plow below USDCAD support at 1.2040-50.
There are not any Canadian economic reports today.
Today’s Suggested Range USD/CAD: 1.2040 – 1.2140