USD/CAD Open: 1.2309-13, Overnight Range: 1.2290-13, Previous Close: 1.2299
WTI Oil is at $72.71 and gold is at $1,779.90. US markets are mixed today.
For today, USD resistance is at 1.2376. Support is at 1.2303.
• Very quiet start to data-heavy week
• Wall Street indexes hover at record highs
• US dollar starts session on mixed note compared to Friday’s opening levels
The Canadian dollar simmered as Canadians sweltered in a coast-to-coast heatwave. The Canadian dollar continues to be supported by the prospect of higher domestic interest rates sooner than expected and hopes for a robust second-half recovery. However, Canadian dollar gains are hampered by speculation that the Fed may be missing the boat on inflation.
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Economists and analysts are becoming concerned due to signs that inflation is taking hold in the US.
They point to the 2.3% rise in PCE Core inflation in just six months, which base-rate effects cannot explain away. The Fed says these increases are temporary and point to price increases in airfare and clothing, which they say are due to pent-up demand from the economy reopening.
Oil prices have risen steadily and remain at multi-year peaks even though OPEC and Russia reportedly plan a July 1 announcement that crude production will increase effective August 1. The increase in transportation costs will be passed through to the consumer via higher prices.
Canada April GDP is forecast to drop 0.9% m/m due to the impact of third-wave COVID-19 restrictions that closed a large swath of the domestic economy. However, traders are expected to look past the weak report, as the pace of vaccinations across the country set the stage for a robust post-pandemic economic boom.
The latest US infrastructure debate is continuing after President Joe Biden appeared to backtrack from earlier comments threatening to veto a deal if his pet programs were not included.
Traders ignored a spike in geopolitical tensions. The US bombed militia groups in the Syria-Iraq border. In addition, US and Iran nuclear talks have stalled. The US will further antagonize China this week when they renew trade and investment talks with Taiwan.
The New York session opened with Wall Street stock futures dancing around Friday’s closing levels. European stock indexes are trading with losses, except for Germany’s DAX index, which is unchanged. Oil prices have slid from their overnight peak, and gold prices inched lower, as well.
EURUSD traded in a narrow 1.1921-1.1944 band. ECB Board Member Fabio Panetta provided additional dovish-speak when discussing the necessity of keeping the unconventional monetary policy tools. His remarks were not a trading factor.
The rest of the G-10 major currencies drifted sideways due to a lack of actionable top tier data today.
Today’s Suggested Range USD/CAD: 1.2280 – 1.2380
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