Canadian Dollar Update, October 25, 2021 – Canadian dollar steady in cautious FX session
USD/CAD Open: 1.2365-69, Overnight Range: 1.2341-1.2378, Previous Close: 1.2369
WTI Oil is at $83.71 and gold is at $1,808.90. US markets are higher today.
For today, USD resistance is at 1.2398. Support is at 1.2368.
- Oil prices raise again, underpinning Canadian dollar
- EURUSD sinks after soft German data
- US dollar opens broadly higher compared to Friday’s opening levels
The Canadian dollar was uninspired in overnight trading. Prices tracked broad US dollar moves, as usual, and those moves were dictated by US Treasury yields and broad risk sentiment.
Friday, Canadian Retail Sales rose 2.1% in August, as expected. However, enthusiasm was tempered by StatsCanada’s preliminary guess for September, which is for a drop of 1.9%. The Canadian dollar retreated from its session peak on the news.
The domestic report was all but forgotten in overnight markets. Traders were digesting Fed Chair Powell’s comments on Friday which did everything but confirm the onset of QE tapering at the November FOMC meeting, while implying he was becoming a tad more concerned about elevated inflation levels.
The US dollar garnered a bit support after US 10-year Treasury yields halted their slide in Asia and climbed from 1.634% to 1.654% in NY.
The US dollar saw a bit of safe-haven demand after Turkey President Erdogan said he would expel ten diplomats including the US and Canadian ambassadors. However, most of the demand was against the Turkish Lira which lost 2.5% overnight.
EURUSD dropped from 1.1664 to 1.1621 in early NY. The weaker than expected German Ifo survey and firming US Treasury yields weighed on prices. The Ifo Institute said, “Sentiment in the German economy has clouded over.
The Ifo Business Climate Index fell from 98.9 points in September to 97.7 points in October. Skepticism is increasingly evident in expectations. Companies assessments of their current situation are also less positive. Supply problems are giving businesses headaches.”
The report may temper any hawkish leanings by the ECB on Thursday. The intraday EURUSD technicals warn that a drop below 1.1610 would extend losses to 1.1550. GBPUSD see-sawed in a 1.3744-1.3791 range and is near the bottom of that band in early NY trading.
Prices are supported by expectations for a hawkish BoE meeting next week but offset by concerns that supply chain disruptions will derail economic growth. Brexit is becoming frothy again. The EU is said to be considering terminating the Brexit trade deal due to the UK’s threat to trigger Article 16 of the Northern Ireland protocol.
AUDUSD and NZDUSD tracked broad US dollar moves and both currency pairs are trading just below their session peaks.
Today’s Suggested Range USD/CAD: 1.2320 – 1.2420