Canadian Dollar Update, September 21, 2021 – Canadian Dollar Bounces
USD/CAD Open: 1.2752-56, Overnight Range: 1.2745-1.2823, Previous Close: 1.2820
WTI Oil is at $70.45 and gold is at $1,779.90. US markets are higher today.
For today, USD resistance is at 1.2911. Support is at 1.2749.
• Canada election results in nearly unchanged Parliament
• Global risk sentiment improves ahead of Wednesday FOMC statement
• US dollar opens in NY with losses against G-10 majors
The Canadian dollar is trading well above yesterday’s opening level thanks to mildly improving global risk sentiment. USD CAD rallied to 1.2894 Monday then retreated steadily throughout the session and continued to do so overnight, finding a bottom at 1.2745.
USDCAD slid due to a shift to positive risk sentiment, in part due to speculation that Chinese authorities will bail out the troubled Evergrande Group. Fears that the property developer would declare bankruptcy and destabilize global markets eased somewhat after the company CEO said they would fulfill their obligations to property buyers.
Asia equity indexes closed mixed to higher. The Hong Kong Hang Seng and Australia ASX posted gains, while Japan’s Nikkei 225 fell. European bourses are recovering yesterday’s loss and Wall Street futures suggest a positive open today.
The Organisation for Economic Development and Cooperation (OECD) issued an interim update today. It was fairly upbeat but noted that underlying risks necessitate ongoing monetary policy stimulus. The report said that the global recovery remains strong, helped by government and central bank support and by progress with vaccinations.
The OECD predicts that G20 inflation will ease to 4.5% at the end of 2021 but stay around 3.5% in 2022. The report also advocates for unchanged monetary policy. It said Fiscal policies should remain flexible and contingent on the state of the economy. A premature and abrupt withdrawal of policy support should be avoided whilst the near-term outlook is still uncertain.
FX traders preferred to focus on tomorrow’s FOMC meeting.
EURUSD traded quietly in a 1.1719-39 range. The failure to break below 1.1700 and hopes for a somewhat dovish FOMC meeting underpin prices while ongoing dovish ECB-speak limits topside moves.
GBPUSD climbed from 1.3650 to 1.3692 due to improved risk sentiment and better than expected CBI Industrial trends data. Nevertheless, the gains are merely a correction while prices are below 1.3730.
AUDUSD climbed from 0.7251 to 0.7283 due to broad US dollar weakness. The minutes from the September 7 RBA meeting repeated that Australian interest rates will remain unchanged until 2024.
The US and Canadian economic calendars only have second-tier data.
Today’s Suggested Range USD/CAD: 1.2750 – 1.2850