Canadian Dollar Update, October 5, 2021 – Canadian dollar trading sideways
USD/CAD Open: 1.2591-95, Overnight Range: 1.2582-1.2628, Previous Close: 1.2589
WTI Oil is at $79.03 and gold is at $1,760.50. US markets are higher today.
For today, USD resistance is at 1.2598. Support is at 1.2526.
• Markets churning and looking for direction
• Eurozone and UK Services PMI data released
• US dollar eases but remains rangebound
The Canadian dollar went for a rollercoaster ride since yesterday’s NY open. On Monday, USDCAD dropped to 1.2558 by mid-morning, then reversed course and climbed to 1.2589 by the end of the day. Prices continued to rise in Asia, reaching 1.2628 due to a bout of risk aversion from falling stock markets. Japan’s Nikkei 225 index lost 2.16%.
USDCAD was also underpinned by fears that the Opec decision would negatively impact global growth due to sharply higher crude prices. The cartel and Russia decided not to raise production in November beyond the previously announced 400,000 barrels per day.
In Europe, equity traders took note of upward revisions to Services and Composite PMI data and bought equities, which helped turn risk sentiment positive. The French CAC index climbed 0.94%, while the UK FTSE 100 is up 0.75%. Wall Street futures are clawing back yesterday’s losses, and S&P 500 futures point to a positive open.
Global markets are distracted by the ongoing US budget and debt ceiling debate but are looking ahead to Friday’s US employment data.
The rebound in US stock prices and rising crude oil prices weighed on USDCAD, which dropped to 1.2585 in early Toronto trading.
EURUSD is stuck in a narrow 1.1591-1.1621 range, with prices garnering a modicum of support from the German and Eurozone Markit PMI reports, which were higher than expected.
GBPUSD is the best performing G-10 currency again, rising from 1.3586 to 1.3642. Markit Services PMI index was 55.4 compared to forecasts of 54.6. The Markit statement said, “the data indicated another strong recovery in UK service sector activity, but severe supply constraints contributed to escalating inflationary pressures.” The comment about inflation pressures underpinned prices as it raised concerns the Bank of England may be forced to raise interest rates sooner than expected.
USDJPY climbed to 111.31 from 110.88 due to rising US Treasury yields and talk that Prime Minister Fumio Kishida planned to raise taxes.
AUDUSD traded choppily due to shifting risk sentiment and the Reserve Bank of Australia decision. The RBA left rates and monetary policy unchanged.
NZDUSD tracked AUDUSD moves. Traders are looking to Wednesday’s Reserve Bank of New Zealand monetary policy decision. A 0.25% increase in the Overnight Cash Rate (OCR) from 0.25% to 0.50% is expected and priced in. The risk is the forward guidance and whether another 0.25% hike will occur in November.
Today US ISM services and Canada Trade reports are due.
Today’s Suggested Range USD/CAD: 1.2550 – 1.2650