Canadian Dollar Update, May 28, 2021 – Canadian Dollar Trading Sideways
USD/CAD Open: 1.2095-99, Overnight Range: 1.2068-1.2108, Previous Close: 1.2067
WTI Oil is at $66.63 and gold is at $1,906.30. US markets are higher today.
For today, USD resistance is at 1.2093. Support is at 1.2064.
• Month-end flows and US data supports US dollar
• PBoC warns as Yuan rises
• USD weaker against GBP, JPY, CAD, and higher vs EUR, AUD, NZD, and CHF
The Canadian dollar is trading sideways. USDCAD is trapped in a 1.2050-1.2150 trading band with month end demand for US dollars underpinning prices while rising oil prices limit gains.
Canadian dollar direction continues to be dictated by US developments, including economic growth outlook, inflation, and President Biden’s latest budget plan. US economic reports continue to highlight the outperformance of the American post-pandemic economic recovery compared to other G-10 economies.
Yesterday, US jobless claims were a pandemic low of 406,000, and Q1 GDP was unchanged at 6.4%. However, Durable Goods Orders and Pending Home Sales were below forecasting which tempered enthusiasm but still underpinned Wall Street.
The positive equity sentiment continued overnight.
President Biden’s $6.0 trillion budget proposal is unveiled today, which will give traders something to chew on. It is merely a “wish list” and merely kicks off a prolonged budget negotiation.
The PBoC pushed back on the surging Yuan rate. They issued a statement saying that CNY can’t be used as a tool to spur exports or offset the impact of commodity prices. “The key is to properly manage expectations, firmly crack down on attempts to manipulate the market or ‘maliciously’ create one-sided expectations. Enterprises and financial institutions should adapt to a two-way fluctuation of the exchange rate.”
EURUSD is at the bottom of its 1.2165-1.2200 range due to month-end US dollar demand, and position adjustment ahead of the US long weekend. ECB Executive Board Member Isabel Schnabel said she was reasonably confident that the Eurozone economy had reached a turning point, but monetary policy support would remain in place until March 2022. Eurozone ESI economic confidence saw its highest reading since January 2018, climbing to 114.5 from 110.5 in April. The failure of EURUSD to break above 1.2250 risks a move below 1.2140 to 1.1950.
GBPUSD is trading at the bottom of its overnight 1.4175-1.4207 range due to broad US dollar strength vs the majors. Trading enthusiasm has waned today as the UK is close for Spring Bank Holiday on Monday.
US PCE, Personal, Spending, Personal Consumption, Chicago Purchasing Manufacturers Index, and Michigan Consumer Sentiment reports should stoke inflation fears ahead of traders making an early exit to start the long weekend.
Today’s Suggested Range USD/CAD: 1.2050 – 1.2150