Canadian Dollar Update, October 12, 2021 – Canadian dollar grinding higher
USD/CAD Open: 1.2464-68, Overnight Range: 1.2460-1.2497, Previous Close: 1.2480
WTI Oil is at USD$80.54 and gold is at USD$1,760.60. US markets are mixed today.
For today, USD resistance is at 1.2485. Support is at 1.2439.
• Oil prices surge on supply demand imbalance
• Rake hike fears undermine global equity indexes
• Commodity currencies outperform as US dollar opens on mixed note
The Canadian dollar rallied again, thanks to another surge in oil prices. West Texas Intermediate (WTI) oil jumped to $81.11 in early NY trading, an 8.1% increase since Thursday. Oil prices continue to be underpinned by rising demand as global economies emerge from the coronavirus pandemic and Opec’s reluctance to increase production to pre-pandemic levels ahead of their previously announced schedule.
China is a major factor behind the surge in prices due to an energy shortage that led to Beijing telling state-owned energy companies to secure winter supplies “at any cost.” The urgency was exacerbated on the weekend due to flooding in China’s biggest coal producing province.
The Canadian dollar continues to benefit from Friday’s contrasting US and Canadian employment reports. US nonfarm employment rose 194,000 in September, well below forecasts for an increase of 500,000 jobs. Canada added 157,100 jobs, well above expectations for a 60,000 gain.
More importantly the Canadian employment result fueled speculation that the Bank of Canada’s October 27 monetary policy statement may be on the hawkish side and suggest an earlier than expected rate hike.
USDCAD extended its October slide, falling from 1.2735 on October 1 to 1.2453 overnight, a 2.2% decline. The currency pair may have further to fall with a move below support in the 1.2400-20 area suggests a retest of 1.2000 support.
The major Asia equity indexes closed deep in the red, spooked by Chinese developments and concerns about soaring energy prices boosting inflation and forcing central banks to raise rates. European bourses are in negative territory but attempting to recoup losses while S&P 500 futures turned positive in early NY trading. Oil and gold prices squeezed out small gains while US 10-year Treasury yields, at 1.600% are just below their overnight peak of 1.628%.
EURUSD is at the bottom end of its Monday-Tuesday range of 1.1547-1.1586 range. German ZEW and Eurozone Survey reports were weaker than expected, due to supply chain issues. EURUSD technicals are negative below 1.1630.
GBPUSD traded in a 1.3570- 1.3672 range with prices underpinned by higher UK yields and forecasts for a rate hike as early as December. The GBPUSD technicals are bullish above 1.3550.
USDJPY extended Friday’s gains reaching 113.48 overnight due to the US 10-year Treasury yield rising to 1.628%
AUDUSD and NZDUSD tracked commodity price gains higher with AUDUSD supported by lockdown restrictions being removed in New South Wales.
Today’s Suggested Range USD/CAD: 1.2400 – 1.2500