Canadian Dollar Update, September 30, 2021 – Canadian dollar suffers from month-end pressures
USD/CAD Open: 1.2726-30, Overnight Range: 1.2713-1.2761, Previous Close: 1.2754
WTI Oil is at USD$75.47 and gold is at USD$1,760.80. US markets are lower today.
For today, USD resistance is at 1.2798. Support is at 1.2558.
• More global growth concerns following mixed China PMI data
• Congress passes bill to avoid US government shutdown tomorrow
• CAD loses 1.0% in September, best performing major G-10 currency
The Canadian dollar managed to recoup some of yesterday’s losses overnight, but it remains under pressure due to month-end US dollar demand by portfolio managers. The Canadian dollar dropped 1.0% month-to-date in September, but it was still the best performing G-10 currency. The New Zealand dollar was the worst, losing 2.6%.
The US dollar gains in September were due to a mix of risk aversion, a surge in US Treasury yields, the hawkish flip by the FOMC, concerns that Chinese government crackdowns on domestic markets would lead to contagion in G-10 markets, and by fears rising oil prices would derail global growth.
In Asia, China PMI reports were mixed. The NBS September Manufacturing PMI was 49.6 vs 50.1 in August 50.1 while the NBS Non-manufacturing PMI was 53.2 compared to 47.5 in August. The Caixin China Manufacturing PMI at 50 was better than the forecast of 49.5.
The impact from the news was minimal as Chinese traders were getting ready for the start of Golden Week holidays.
The US Congress passed a bill to fund the government until December 3, which slightly improved risk sentiment.
EURUSD is trading at the low of the overnight 1.1569-1.1609 range. Modestly better than expected German and Eurozone employment data was not a factor, but month-end portfolio rebalancing flows weighed on the currency.
GBPUSD continues to suffer from the domestic energy crisis and a dash of uncertainty as the UK furlough scheme ends and traded in a 1.3417-1.3468 range. GBPUSD appears to be oversold which suggests a bounce may be due.
USDJPY traded in a 111.81-112.07 overnight range with prices supported by the firm US 10-year Treasury yield, currently at 1.532%, as well as month-end demand for US dollars.
AUDUSD and NZDUSD are suffering from month-end US dollar demand in addition to a bout of nervousness over the weak to soft Chinese PMI data.
Today’s US data includes US Q2 GDP (forecast 6.6% y/y) Chicago PMI (forecast at 65) and weekly jobless claims (forecast 335,000).
Today’s Suggested Range USD/CAD: 1.2630 – 1.2730