Canadian Dollar Update, September 29, 2021 – Canadian dollar probing support
USD/CAD Open: 1.2679-83, Overnight Range: 1.2671-1.2701, Previous Close: 1.2685
WTI Oil is at USD$75.21 and gold is at USD$1,726.70. US markets are higher today.
For today, USD resistance is at 1.2743. Support is at 1.2690.
• WTI oil prices drop from yesterday’s high on US inventory build
• US 10-year Treasury yields retreat from 1.558% peak
• US dollar gains, GBP underperforms
The Canadian dollar remains rangebound. USDCAD is trapped inside the well-defined 1.2600-1.2700 band with topside moves thwarted by high oil prices and the prospect that the Bank of Canada raises interest rates before the Fed.
The downside is limited due to bullish USDCAD technicals and broad US dollar demand resulting from renewed global growth concerns and fears of an equity market sell-off. USDCAD continues to be underpinned by fall-out from the FOMC’s hawkish shift. Traders were caught off guard by the FOMC dot-plot projecting a rate hike in 2022.
Asia markets were pressured from the fall-out of Tuesday’s Wall Street meltdown. The Nikkei 225 led the major indexes lower, falling 2.12%. Chinese markets underperformed due to ongoing concerns around Evergrande, and domestic power issues, ahead of the Golden Week holiday period.
European markets opened in rally mode and the French CAC 40 index gaining 1.21% is leading the charge. Wall Street futures are rebounding with S&P 500 futures rising 0.8% (as of 6:50 am ET). The rally is fueled by the drop in the US 10-year yield to 1.50% from 1.558% in Asia.
Markets were amused but ignored comments from Senator Elizabeth Warren, a left, left wing Democrat who said “he was a dangerous man to head up the Fed.”
EURUSD broke below is trading at the bottom of its 1.1656-1.1689 range. ECB Governing Council member Gabriel Makhlouf’s dovish comments underscored the difference in the ECB and Fed interest rate outlooks, which weighed on the currency. Eurozone economic sentiment rose to 117.8 from 117.6 in August, which ING analysts say suggests the Eurozone recovery is still on track. A break below 1.1650 targets 1.1580.
GBPUSD continued to get hammered on fears the energy crunch will derail UK growth. GBPUSD extended yesterday’s slide, falling from 1.3554 to 1.3479 where is sitting in NY. A break below 1.3440 targets 1.3270.
USDJPY drifted down from 111.67 to 111.22 in tandem with the retreat in the US 10 year Treasury yield. Japan has a new Prime Minister, Fumio Kishida , who will lead the LDP party in the upcoming election.
AUDUSD and NZDUSD are trading at their overnight lows, weighed down by global growth concerns, China worries, and broad US dollar strength.
Fed Chair Powell and NY Fed President Williams are speaking. They are unlikely to say anything new.
Today’s Suggested Range USD/CAD: 1.2670 – 1.2770