Canadian Dollar Update, November 24, 2021 – Canadian dollar steady
USD/CAD Open: 1.2691-95, Overnight Range: 1.2667-1.2692, Previous Close: 1.2671
WTI Oil is at $78.37 and gold is at $1,790.10. US markets are mixed today.
For today, USD resistance is at 1.2673. Support is at 1.2649.
- Sliding oil prices sinking Canadian dollar
- Fed Chair Powell renomination fuels broad US dollar demand
- US dollar opens with gains across the board
The Canadian dollar plunge lost momentum yesterday, and the beleaguered currency managed to recoup some losses. USDCAD peaked at 1.2742 yesterday, then dropped to 1.2671 at the close and drifted lower during the overnight session.
The Canadian dollar is collateral damage in an environment where the US dollar is king. President Biden’s re-nomination of Jerome Powell as Fed Chair removed a layer of uncertainty in financial markets. The news sparked renewed US dollar demand as Mr. Powell is expected to raise US interest rates faster than previously anticipated.
Yesterday, Bank of Canada Deputy Governor Paul Beaudry warned, “The debt that households accumulated at unusually low interest rates will stay with them well into the future. In the meantime, interest rates can be expected to rise as the effects of the pandemic dissipate and excess capacity in the economy is fully absorbed.” Traders rightly ignored his comments.
The Canadian dollar largely dismissed erratic oil price action. West Texas Intermediate (WTI) has traded lower since breaking support at $83.00/barrel on November 10. The move followed reports that oil supply and demand would be balanced early in the new year, rising US crude inventories, and reports the US would lead a coordinated move to release oil from Strategic Petroleum Reserves (SPR).
The SPR move happened yesterday, with China, Japan, the UK, and South Korea releasing or planning to release reserves. WTI rallied on the news rising from $75.25/b to $79.18/b overnight, partly because analysts at Goldman Sachs described the move as a “drop in the ocean.”
EURUSD fell to 1.1204 from 1.1255 due to a soft German IFO survey and reports the European Union plans to issue new coronavirus regulations. The Ifo survey noted, “Sentiment in the German economy has taken a downward turn. The Ifo Business Climate Index fell from 97.7 points in October to 96.5 points in November. Companies were less satisfied with their current business situation, and expectations became more pessimistic. Supply bottlenecks and the fourth wave of the coronavirus are challenging German companies.”
GBPUSD see-sawed in a 1.3354-1.3389 band with prices supported by UK CBI factory orders data but gains capped by broad US dollar strength.
USDJPY is trading at the top of its 114.83-115.23 range, supported by broad US dollar demand and a rebound in US 10-year Treasury yields to 1.646%.
NZDUSD dropped to 0.6893 from 0.6955 despite the Reserve Bank of New Zealand raising interest rates 0.25% to 0.75%. Traders were disappointed that rates did not rise by 0.50%. Losses may be short-lived because the statement was hawkish, indicating further rate hikes ahead.
There is a ton of US economic data on tap including, durable goods orders, GDP, Michigan consumer sentiment and the FOMC minutes.
Today’s Suggested Range USD/CAD: 1.2600 – 1.2700