Canadian Dollar Update, November 15, 2021 – Canadian dollar rebounds
USD/CAD Open: 1.2521-25, Overnight Range: 1.2522-1.2554, Previous Close: 1.2552
WTI Oil is at $79.44 and gold is at $1,862.30. US markets are mixed today.
For today, USD resistance is at 1.2562. Support is at 1.2484.
- Risk tone improves after China Industrial Production and Retail Sales beat forecasts
- EURUSD steady after ECB President reaffirms dovish outlook
- US dollar retreats on mildly improved risk tone
The Canadian dollar inched higher overnight, extending gains from Friday. USDCAD fell from Friday’s 1.2604 peak to a low of 1.2522 in NY today due to a mix of profit-taking, improved risk sentiment, and lower US 10-year Treasury yields. Traders ignored lower oil prices.
West Texas Intermediate, the North American benchmark, topped out at $84.92/barrel on November 9 and have since slid steadily lower. Concerns about rising US inventories, slowing demand, and fears that the Biden Administration will release supplies from the Strategic Petroleum Reserves drove prices to a low of $79.62/b overnight.
Chinese October Industrial Production rose 3.5% y/y compared to the consensus forecast of 3.0%y/y. Analysts suggest the gain is due to the easing of energy shortages. However, they caution that gains may not be repeated in November because of the expanding property development downturn.
Chinese Retail Sales rose 4.9% y/y, easily topping the forecast for a 3.5% gain. However, renewed coronavirus outbreaks in some Chinese regions tempered enthusiasm.
President Biden and President Xi Jinping are meeting virtually today. They reportedly will discuss terms of trade, economic coercion, human rights, and Taiwan. The talks are unlikely to have any impact on FX markets.
EURUSD drifted higher, rising from 1.1438 to 1.1463 in NY due to broad US dollar weakness. However, gains are limited as ECB President Christine Lagarde reaffirmed her dovish outlook. She predicted that Euro area GDP would rise above its pre-pandemic level by the end of the year. She hedged that forecast by saying growth was being hampered by supply chain disruptions causing shortages of materials, and equipment. Ms. Lagarde said the conditions for lift-off will not be satisfied in 2022. EURUSD continues to consolidate losses and is in a downtrend while prices are below 1.1470.
GBPUSD rallied from 1.3405 to 1.3442 due to broad US dollar weakness. Prices are also supported by anticipation that a robust UK employment report on Tuesday will lead to the Bank of England raising interest rates in December.
USDJPY is trading at the bottom of its 113.76-114.04 range mainly due to the drop in US treasury yields. Traders ignored news that Japan’s Q3 GDP fell 3.0% y/y as the drop was due to coronavirus restrictions.
Canada releases Wholesale and Manufacturing Sales data today.
Today’s Suggested Range USD/CAD: 1.2470 – 1.2570