Canadian Dollar Update, May 5, 2021 – Canadian Dollar Pops Higher
USD/CAD Open: 1.2284-88, Overnight Range: 1.2271-1.2310, Previous Close: 1.2309
WTI Oil is at $65.42 and gold is at $1,784.60. US markets are mixed today.
For today, USD resistance is at 1.2293. Support is at 1.2258.
• Commodity currency bloc rallies
• Yellen changes tune on rate hikes
• US dollar opens mixed
The Canadian dollar turned yesterday’s frown upside down. Yesterday, Treasury Secretary Janet Yellen warned in remarks to “The Atlantic: ” “It may be that interest rates will have to rise somewhat to make sure our economy does not overheat, even though the additional spending is relatively small relative to the size of the economy.”
That wasn’t what markets wanted to hear. Stocks plunged, and the US dollar soared. The news alarmed the Biden Administration, and Ms. Yellen was quick to offer a clarification.
She told the Wall Street Journal that all she was really saying was that any near-term inflation increases would be temporary as they are due to supply chain bottlenecks. Stock prices recovered somewhat. The Dow Jones Industrial Average finished flat, while both the NASDAQ and S&P 500 closed with losses.
European indexes are higher with the German Dax posting a 1.33% gain.
EURUSD dropped to 1.1987 from 1.2026, suffering from modestly weaker than expected data. Composite and Services final PMI readings in Germany, France, and Italy, missed forecasts. The short-term EURUSD outlook is for a test of support at 1.1950.
GBPUSD climbed to1.3925 from 1.3878, supported by EURGBP selling. Traders are keeping an eye on The Scottish elections. GBPUSD needs to break above resistance in the 1.3960 area or risk a retest of 1.3800.
AUDUSD is trading at the top of its 0.7706-0.7740 range, underpinned by positive economic data and higher commodity prices. NZDUSD climbed to 0.7191 from 0.7145, following a better than expected employment report. Jobs increased 0.6% q/q in Q1 compared to the forecast of a 0.2% rise.
Oil prices jumped again. WTI rallied from $64.95 yesterday morning to $66 63 in NY, fueled by a sharp 7.7 million barrel decline in US crude inventories for the week ending April 30.
The Canadian dollar is in demand due to higher crude prices and expected spillover benefits from a post-pandemic US economic boom.
Today’s data includes ADP employment report, and the ISM Services PMI data.
Bank of Canada Governor Tiff Macklem also speaks.
Today’s Suggested Range USD/CAD: 1.2240 – 1.2340