Canadian Dollar Update, September 22, 2021 – Canadian Dollar Yo-Yo
USD/CAD Open: 1.2789-93, Overnight Range: 1.2772-1.2825, Previous Close: 1.2812
WTI Oil is at $71.75 and gold is at $1,779.10. US markets are higher today.
For today, USD resistance is at 1.2830. Support is at 1.2690.
• Risk sentiment improves after Evergrande makes interest payment
• Updated FOMC projections may upset markets
• US dollar opens inside recent ranges
The Canadian dollar is trading like a yo-yo. Up, down, and up again, in time with the ebbs and flows of global risk sentiment. This morning, the Canadian dollar is “up” compared to where it closed on Tuesday.
The Canadian election is over and to paraphrase Tennessee Ernie Ford “$700 million and what do you get? Another day older and deeper in debt.”
Global investors were not remotely interest in Canadian politics. They were focused on Chinese property developers, specifically, the Evergrande Group. The deeply indebted company roiled global stock markets for the past few days due to fears that it would be unable to meet debt obligations. Investors feared that if Evergrande went bankrupt, the fall-out would spread through financial markets around the world. It didn’t happen-yet.
Evergrande announced it would made interest payments due Thursday. However, there are reports that the payment is only for domestic bonds and not offshore payments.
The US House is gradually making headway with a bill to fund the government until December 3, which is helping to alleviate concerns of a government shutdown.
The FOMC is not expected to announce tapering plans at today’s meeting. Three weeks ago, Fed Chair Jerome Powell said that there was substantial slack in employment and was worried about the pandemic. He said an “ill-timed” move would be harmful. He acknowledged rising inflation but said it is transitory.
Many of his colleagues do not agree with Mr. Powell’s view. Philadelphia Fed President Patrick Harker prefers a rate hike sooner rather than later, and Dallas Fed President Robert Kaplan agrees. They do not have a vote. New York Fed President John William is a voter, and he is in Powell’s camp. He said the delta-variant increased uncertainties.
Today’s “dot-plot” forecast may create some FX volatility if they suggest higher rates sooner than what the dots showed in June.
The Canadian dollar is closely tracking US stocks, particularly the S&P 500 index. If stocks rise following the FOMC meeting, the Canadian dollar may follow suit.
EURUSD traded sideways in a 1.1718-1.1737 band with traders ignoring news that Germany’s IFO institute trimmed German GDP growth in 2021 to 2.5%.
GBPUSD remains on the defensive as intraday technicals are bearish and traders are sidelined ahead of the FOMC decision.
USDJPY climbed steadily overnight, rising from 109.13 to 109.60. The Bank of Japan left rates and stimulus unchanged.
The US and Canadian economic calendars are empty.
Today’s Suggested Range USD/CAD: 1.2690 – 1.2790