Canadian Dollar Update, May 7, 2021 – Canadian Dollar on Fire
USD/CAD Open: 1.2182-86, Overnight Range: 1.2150-1.2188, Previous Close: 1.2148
WTI Oil is at $64.82 and gold is at $1,832.00. US markets are higher today.
For today, USD resistance is at 1.2161. Support is at 1.2115.
• Canadian dollar hits 82.4 cents US
• Analysts predicting US added close to 1 million jobs: Canada forecast to lose 175,000 jobs
• US dollar opens mixed ahead of nonfarm payrolls data
The Canadian dollar soared again yesterday. The catalyst was better than expected US weekly jobless claims data which is viewed as further evidence of a post-pandemic global economic boom led by the US. Analysts upgraded their nonfarm payrolls forecasts with many expecting well over a million new jobs. Positive risk sentiment soared, boosting stocks, and sinking the US dollar. The US post-pandemic recovery is moving full-steam ahead.
Traders ignored better than expected Chinese Caixin Services PMI and Trade data. There are reports that the US and China will meet to review the progress of the Phase 1 Trade Deal which could create some turmoil in markets. Biden Administration officials continue to admonish China over human rights, as well.
Asia equity markets closed flat to slightly higher, except for mainland China markets.
Europe indexes are higher, and US futures point to a positive open for Wall Street.
The Canadian dollar closed at 82.3 cents to the US yesterday, despite forecasts that Canada lost 175,000 jobs in April. That is a bit of a head-scratcher.
USDCAD is undermined by projections of a post-pandemic, commodity “super-cycle” boosting prices of raw resources. In addition, spill-over effects from US fiscal and monetary stimulus, and the BoC bring forward the timing of its next rate hike, are weighing on the currency pair. Traders are willing to look past ugly domestic employment data today. They expect a robust Canadian economic recovery as a growing number of Canadians have received vaccines.
EURUSD dipped to 1.2054 in early European trading after the German trade surplus narrowed. But you can’t keep a good man down, or seemingly the single currency, as prices rebounded to the session peak of 1.2090. EURUSD is underpinned by soft US Treasury yields and bullish technicals looking for a test of 1.2150.
GBPUSD is trading near the post-Bank of England meeting peak. The BoE left interest rates unchanged but announced it was tapering QE purchases. They upgraded growth and inflation forecasts as well, all of which were largely expected. The BoE says the tapering is technical and not signal rates are going to rise. GBPUSD is sitting in the middle of its 1.3890-1.3927 overnight range.
USDJPY traded quietly in a 108.95-109.19 range. Prices are weighed down by the Fed’s dovish outlook and soft US Treasury yields.
AUDUSD and NZDUSD were rangebound. Both currency pairs ignored the latest China data as traders await today’s US employment report.
Canada Ivey PMI for April is on tap
Today’s Suggested Range USD/CAD: 1.2130 – 1.2230