Canadian Dollar Update, November 28, 2022 – Canadian dollar roiled by risk aversion
USD/CAD Open: 1.3434-38, Overnight Range: 1.3397-1.3472, Previous Close: 1.3381
WTI Oil open at $73.78 and gold open at $1,760.55. US markets are lower today.
For today, USD resistance is at 1.3480. Support is at 1.3405.
- Covid protests raise risk aversion fears
- New Chinese Covid cases soar over 40,000
- US dollar rallies and CAD is the worst performing major G10 currency
The Canadian dollar gapped lower at the Asian open and never looked back.
A wave of risk aversion sentiment washed over equity, bond, and stock markets leading to safe haven demand for US dollars.
Traders were unnerved after reports of widespread civil unrest in many cities in China. People are pushing back the Covid-zero policies and are tired of lockdowns, closures, and other restrictions.
Meanwhile, China is suffering from a new coronavirus outbreak with new daily cases rising to 40,020 on November 27.
That was all the news Asia traders needed to buy safe-haven US dollars and many currency pairs gapped lower when Asia markets opened on Monday.
The Canadian dollar was one of them. USDCAD closed at 1.3381 Friday, opened at 1.3397 then soared to 1.3472 before retreating in Europe.
The Canadian dollar came under additional pressure after West Texas Intermediate (WTI) extended last week’s slide and fell to $73.63/barrel.
Fears of slowing demand from China due to an array of Covid restrictions and news that the US is allowing oil shipments from Venezuela are driving prices lower. However, Opec may not be too happy with the latest developments and may take steps to shore up prices when the cartel meets at the end of the week.
EURUSD dipped in Asia then rallied from 1.0342 to 1.0496 underpinned by hawkish comments from ECB officials. Dutch central bank President Klaas Knot suggested that rate hikes will continue despite recession risks.
Traders are awaiting Wednesday’s German and ECB inflation reports.
GBPUSD rallied from 1.2028 in Asia to 1.2117 in Europe before retreating to 1.2089 in NY. Some analysts believe GBPUSD is vulnerable to a correction lower due to concerns the market is too aggressive with its peak interest rate pricing. Despite the overnight volatility GBPUSD opened unchanged from where it closed Friday.
USDJPY fell to 137.50 from 139.41 due to safe-haven demand for yen.
AUDUSD traded negatively in a 0.6667-0.6727 range undermined by the latest bout of risk aversion sentiment and weaker than expected Australian Retail Sales data.
Today’s Suggested Range USD/CAD: 1.3400– 1.3500