USD/CAD Open: 1.3535-39, Overnight Range: 1.3525-1.3566, Previous Close: 1.3540
WTI Oil open at $77.69 and gold open at $1,983.49. US markets are lower today.
For today, USD resistance is at 1.3574. Support is at 1.3504.
The Canadian dollar slipped further in a relatively quiet overnight session. The Loonie remained on the defensive with oil prices inching lower and ahead of US data later in the week which is expected to reinforce a hawkish Fed bias.
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The Canadian dollar is also under pressure from widening CAD/US interest rate differentials that favour the US dollar. That’s because the Fed is expected to raise interest rates next week and leave the door open for another hike in June, while the Bank of Canada will leave domestic rates unchanged.
The public service strike is another negative for the Canadian dollar. The Public Service Alliance of Canada (PSAC) represents 230,000 workers across Canada and 155,000 are on strike. CIBC economists estimate that if the strike lasts for a month, it will reduce economic growth by 0.7%.
Oil prices are hurting Loonie sentiment. West Texas Intermediate (WTI) started sliding last week and hit $76.75/b overnight, before rebounding to $77.70/b in early NY trading. Oil traders are mildly concerned about US recession risks if the Fed continues to hike rates.
The Canadian economic calendar is light until Friday’s February GDP release, although growth concerns from the PSAC work stoppage will overshadow the results.
Asia equity indexes closed lower led by a 1.24% drop in the Shanghai Shenzhen CS1 300 index. Japan’s Nikkei 225 index closed with a tiny 0.10% gain. European bourses are directionless and close to unchanged, while S&P 500 futures are flat. Gold prices dipped modestly.
EURUSD traded above 1.1000, reaching 1.1020 in the wake of the German IFO survey data. It wasn’t that special but merely suggested that the German business outlook improved, rising from 93.3 to 93.6 in April. It was a good news/bad news report. Companies surveyed were optimistic about the future but were pessimistic around current conditions. Nevertheless, the news reinforced the prospect of a hawkish ECB monetary policy meeting next week.
GBPUSD bounced in a 1.2412-1.2458 range. Gains were fueled by the lingering impact of earlier data that suggested the Bank of England would raise rates next month. However, sales of EURGBP data hampered gains.
USDJPY rallied from 133.90 to 134.69 in early NY trading due to US rate hike expectations and dovish comments from BoJ Governor Ueda.
AUDUSD is just above the low of its 0.6667-0.6702 range due to softer commodity prices.
Today’s data includes Canadian New Housing Price Index and the US Dallas Fed Manufacturing Index.
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