Canadian Dollar Update, November 19, 2021 – Canadian dollar drops again
USD/CAD Open: 1.2640-50, Overnight Range: 1.2587-1.2660, Previous Close: 1.2600
WTI Oil is at $76.11 and gold is at $1,849.30. US markets are mixed today.
For today, USD resistance is at 1.2678. Support is at 1.2617.
- Soft crude prices sink Canadian dollar
- Turkey central bank slashes rates 1.0%
- US dollar softer against G-10 majors, except CAD
The Canadian dollar gave back all yesterday’s gains and then some overnight. Sliding crude oil prices were a factor, but the bulk of the move was due to a sudden shift in sentiment, which became negative, although the reason isn’t apparent.
West Texas Intermediate (WTI) oil rallied from a low of $77.00/barrel yesterday to $79.84 just before Europe opened today. Then prices tumbled, falling to $76.24 in NY, due to widespread demand for US dollars. The White House admitted that President Biden and Chinese President Jinping discussed releasing crude from Strategic Petroleum reserves, which weighed on prices.
The Canadian dollar will not get any support from September retail sales, which are expected to have declined 1.7% m/m.
The US dollar traded with a slight softening bias in Asia, but that changed when Europe opened.
The Euro area has been experiencing rising numbers of new COVID-19 cases and a 5% increase in coronavirus-related deaths in the past week. Government officials reacted, imposing new, restrictive Covid-19 measures in major regions of Europe.
Germany said they are banning unvaccinated people from public places. Austria went a step further and banned the unvaccinated from leaving home. Sweden is implementing a health pass, and the Czech Republic banned unvaccinated people from all public events.
Traders reacted and bought US dollars across the board, except against the Japanese yen. The Canadian dollar was collateral damage.
Global markets are unsettled because President Biden may announce the fate of Fed Chair Jerome Powell this weekend. Analysts suggest that there is a 50% chance that Mr. Powell, a Republican, will be replaced by Democrat Lael Brainard. Both are considered doves, but markets hate uncertainty.
EURUSD plunged to 1.1268 from 1.1372 after prices failed to rally above 1.1400, in a move exacerbated by more dovish comments from ECB President Christine Lagarde. She stressed that “premature tightening” would be an unnecessary headwind for an economy already suffering from supply chain issues. Eurozone and German data were ignored.
Traders are already looking ahead to next week. Americans will be focused on Thanksgiving holidays with economic data relegated to the back seat. The minutes from the November 3 FOMC meeting are released Wednesday with analysts eager to read about tapering discussions.
Today’s Suggested Range USD/CAD: 1.2600 – 1.2700