Canadian Dollar Update, September 2, 2021 – Canadian dollar going nowhere
USD/CAD Open: 1.2600-04, Overnight Range: 1.2589-1.2637, Previous Close: 1.2619
WTI Oil is at $70.44 and gold is at $1,814.10. US markets are higher today.
For today, USD resistance is at 1.2645. Support is at 1.2494.
• Eurozone data ignored by EURUSD traders ahead of Friday’s NFP data
• WTI oil steady despite Opec production increase
• US dollar slides but stays inside well-defined G-10 ranges
The Canadian dollar is trading at the whim of US dollar sentiment. This morning that sentiment is mildly bearish, thanks to the lower-than-expected ADP employment data released yesterday. ADP reported the US added 374,000 jobs in August.
Forecasters expected a gain of 613,000.
Traders immediately dialed back expectations for Friday’s nonfarm payrolls (NFP). The weak jobs data reduces pressure on the Fed to begin tapering.
However, the correlation between the ADP and NFP results is poor. Traders selling US dollars in anticipation of a soft NFP result may be seriously disappointed. An upside surprise to the NFP 750,000 forecast would renew taper and rate hike talk and boost the US dollar.
Opec confirmed it would increase September production by 400,000 barrels per day to the dismay of some traders. They thought the resurgence of COVID-19 delta-variant cases and slowing growth in China would force the cartel to delay the increase.
WTI oil prices remained steady, in part because Opec raised their 2022 oil demand forecast to 4.2 million barrels per day from 3.28 million b/day. Prices are also underpinned by the shutdown of US oil rigs in the Gulf of Mexico.
The Canadian dollar is getting some support from firm crude prices. A weak Canadian Merchandise Trade Report (forecast $1.48 billion vs June $3.22 b) will not impact FX.
The overnight session was choppy, but ranges remained intact.
EURUSD traded in a tight 1.1835-1.1855 range and is at the top of that band in early NY trading. Prices are supported by the weak ADP report and downgraded NFP forecasts. In addition, recent comments from ECB officials have led to speculation that the ECB may announce a tapering program at next week’s meeting. The EURUSD technicals are bullish above 1.1770.
GBPUSD tracked EURUSD higher, rising from 1.3769 to 1.3800, in an uneventful session. Prices may struggle to post further gains in part because a spate of weak economic reports has reduced the risk that the Bank of England would tighten.
AUDUSD rallied to 0.7391 from 0.7357 due to broad US dollar weakness and a record trade surplus. NZDUSD followed AUDUSD higher, rising from 0.7059 to 0.7093.
US merchandise Trade and weekly jobless claims reports are ahead.
Today’s Suggested Range USD/CAD: 1.2520 – 1.2620