Canadian Dollar Update, May 6, 2020 – Canadian Dollar trading sideways
USD/CAD Open: 1.4065-69, Overnight Range: 1.4022-1.4137
WTI Oil is at $23.46 and gold is at $1,694.00. US markets are mixed today.
For today, USD resistance is at 1.4173. Support is at 1.4065.
• EURUSD sinks after European Commission forecasts 2020 GDP to decline 7.7%
• Traders biding time, awaiting BoE on Thursday, NFP on Friday
• Oil prices rise over 3.0% since yesterday
The Canadian dollar consolidated its recent gains overnight, with prices tracking closely to broad US dollar moves. Global equity indices traded mixed in an uneventful session. Japan’s Nikkei 225 was down while Hong Kong’s Hang Seng index rallied. European equity indices are flirting with flat to slightly lower while S&P Futures are pointing to a positive open on Wall Street.
FX traders are also looking ahead to upcoming event risk. The Bank of England monetary policy meeting is Thursday and Canadian, and US employment reports are due Friday. Those risks have underpinned the greenback.
In Europe, EURUSD dropped to 1.0783 from 1.0844, immediately following the release of the European Commission Spring forecasts. It wasn’t pretty. The EC “projects that the euro area economy will contract by a record 7¾% in 2020 and grow by 6¼% in 2021.” They also warned of an uneven recovery, noting “Given the interdependence of EU economies, the dynamics of the recovery in each Member State will also affect the strength of the recovery of other Member States.” A rash of weak economic data from Germany and the Eurozone added to the selling pressure. However, prices have recovered slightly in early Toronto trading.
GBPUSD dropped alongside the single currency after the EC forecasts were released. UK April Construction PMI dropped to 8.2, well below the 22 predicted and 39.3 seen in March, which also undermined the currency pair. The Bank of England monetary policy meeting is Thursday with traders awaiting updated economic forecasts.
FX traders are cautious as Canadian, and US employment reports are released, Friday. The US is expected to lose 22 million jobs, with the unemployment rate surging to 14%. The Canadian data may be a tad uglier as Canada unemployment is projected to rise to 16%.
Today’s Suggested Range USD/CAD: 1.4060– 1.4160