Canadian Dollar Update, November 22, 2021 – Canadian dollar consolidates losses
USD/CAD Open: 1.2633-37, Overnight Range: 1.2630-1.2656, Previous Close: 1.2643
WTI Oil is at $76.49 and gold is at $1,804.60. US markets are mixed today.
For today, USD resistance is at 1.2716. Support is at 1.2681.
- Holiday-shortened week in the US
- Turkey central bank slashes rates 1.0%
- US dollar softer against G-10 majors, except CAD
The Canadian dollar is consolidating losses fueled by board US dollar demand and sliding oil prices. The currency may also be suffering from concerns the flooding and landslides in British Columbia will negatively impact domestic growth due to disruptions in rail services.
The Canadian dollar has been under pressure since November 10, when prices rallied following a much higher than expected US CPI reading. The losses were exacerbated when Canadian inflation data disappointed traders. CPI rose 4.7% y/y in September, and traders were expecting a larger increase.
At the same time, West Texas Intermediate (WTI) oil prices tumbled from their November 10 peak of $84.25/b to $75.05/b overnight. There are rumours that China, Japan, and the US will coordinate the release of crude from their Strategic Petroleum Reserves, which may occur as global crude demand slows.
The Canadian dollar did not derive any benefit after Bank of Canada Governor Tiff Macklem appeared to suggest the timing of a rate hike may be “getting closer,” when he penned an op-ed in the UK Financial Times. However, Deputy Governor Lawrence Schembri appeared to muddle that view when he suggested that high uncertainty around the output gap, may keep rates low.
It is Thanksgiving week in America. Many workers are on holiday for the week and most US financial markets close early on Wednesday.
Wednesday is also a busy day for US data. Durable Goods Orders, Weekly Jobless Claims, Q3 GDP, Personal Income and Expenditures, New Home Sales and Michigan Consumer Sentiment are released.
In addition, the FOMC minutes from the November 3 meeting are released. These minutes should have little bearing on FX activity.
EURUSD traded in a 1.1261-1.1292 range due to contrasting Fed and ECB interest rate outlooks. In addition, anti-vaccine riots in many European cities combined with talk of new travel restrictions in the Euro area because of rising coronavirus cases are weighing on the currency.
GBPUSD remained ranged bound with gains capped by EU/UK trade issues and broad US dollar strength.
USDJPY rallied to 114.26 from 113.93 on the back of higher US Treasury yields.
The Reserve Bank of New Zealand monetary policy meeting is Thursday, and they are widely expected to raise rates 0.25% with some risk of a 0.50% increase. AUDUSD and NZDUSD are underpinned as coronavirus restrictions ease and their economies reopen.
Today’s Suggested Range USD/CAD: 1.2620 – 1.2720