Canadian Dollar Update, September 17, 2021 – Canadian Dollar Looking Ahead to Fed
USD/CAD Open: 1.2651-55, Overnight Range: 1.2639-1.2689, Previous Close: 1.2684
WTI Oil is at $71.64 and gold is at $1,750.90. US markets are lower today.
For today, USD resistance is at 1.2744. Support is at 1.2623.
• FX focus shifts to Wednesday’s FOMC meeting
• Wall Street will drive FX markets today
• US dollar extends yesterday’s gains
The Canadian dollar tracked broad US dollar moves overnight while continuing to bounce between support and resistance levels.
FX markets were rangebound overnight with the US dollar maintaining its bullish bias. Asian activity was subdued ahead of a four-day weekend for China and Taiwan. Traders were cautious as next week is filled with central bank policy meetings.
The Federal Open Market Committee (FOMC) meeting Wednesday is the main focus. A debate is raging around the likelihood of the Fed announcing QE tapering. That probably won’t happen if Fed Chair Powell’s recent comments are a guide. On August 27 he said that there was “substantial slack remaining in the labor market and is concerned about the ongoing pandemic”. Influential NY Fed President John Williams agreed with the Chair on September 8 saying the delta-variant increased uncertainties to the outlook.
Such being the case, a tapering announcement may not occur until November.
Canadian dollar traders are ignoring the Federal election which happens Monday. Recent polls show the Liberals and Conservatives tied with neither party garnering enough votes for a majority. USDCAD direction is dictated by US interest rate and global growth outlooks.
EURUSD consolidated recent losses and traded in a 1.1760-87 range. ECB Chief Economist Philip Lane reportedly told a group of private investors that Eurozone inflation would hit the target by 2025 and said rates could rise earlier. That created a stir inside the ECB, but not in FX land. Eurozone inflation was confirmed at 0.4% m/m and not a factor for traders. EURUSD is trading with a negative bias below 1.1820.
GBPUSD climbed erratically, rising from 1.3777 to 1.3811 before giving back most of the gains when August Retail Sales were lower than expected. Retail Sales fell 0.9% m/m compared to the consensus forecast for a 0.5% gain. Bank of England inflation expectations jumped to 2.9% from 2.5%.
USDJPY continued to grind higher after bottoming out at 109.10 on Wednesday. Prices were supported by rising US Treasury yields.
AUDUSD is retreating from its overnight peak of 0.7320 in part due to concerns about increased tensions with China. Beijing is annoyed with Australia’s participation in the USUK Security pact. Chinese authorities have a history of showing displeasure with Australia by banning imports or raising tariffs.
The Michigan Consumer Sentiment Index (forecast 72.2) is ahead.
Today’s Suggested Range USD/CAD: 1.2650 – 1.2750