USD/CAD Open: 1.2365-69, Overnight Range: 1.2334-1.2381, Previous Close: 1.2340
WTI Oil is at $73.06 and gold is at $1,763.50. US markets are higher today.
For today, USD resistance is at 1.2420. Support is at 1.2356.
• Spread of Delta variant coronavirus sours risk sentiment
• Tapering concerns fuel greenback demand
• US dollar opens higher, led by commodity currency bloc decline
The Canadian dollar sank under a fresh wave of risk aversion sentiment that fueled US dollar demand. Traders renewed concern about Fed tapering after Richmond Fed President Thomas Barkin said the Fed had made “substantial further progress” towards its inflation goal, implying tapering QE purchases was warranted. He said he would wait until next year to see if the Fed’s inflation and employment targets had been reached to start raising rates.
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The Wall Street Journal reported the FOMC discussed a “two-stage” tapering program. Policymakers talked about reducing purchases of mortgage-backed securities as the current program may be contributing to rising housing prices.
Traders were also concerned that a new wave of delta-variant coronavirus cases could hamper the global recovery. Australia and Malaysia enacted new lockdown measures to combat the latest outbreaks.
Asia equity markets closed in the red as COVID-19 variant outbreaks spooked traders.
China’s Shanghai Shenzhen CSI 300 index fell 1.17%, leading the indexes lower. European traders were not as concerned, in part because of vaccine rollouts in the Eurozone. The French CAC index led the rally, rising 1.54%, followed by the German Dax, which gained 1.08%. Wall Street futures are flat, and both gold and oil prices are lower.
West Texas Intermediate, the North American benchmark price for crude, dropped from $74.36% yesterday to $72.40. Traders are concerned about a slower than expected global recovery due to persistent coronavirus outbreaks. In addition, caution ahead of Thursday’s OPEC meeting weighed on prices.
EURUSD is probing support in the 1.1900 area, which if decisively breeched, will extend losses to 1.1840. Traders ignored positive Eurozone data including a jump in Economic Sentiment to 117.9 from 114.5, and a rise in the Business Climate index to 1.71 from 1.49. Price action is likely distorted by month, quarter, and half-year portfolio rebalancing flows.
GBPUSD tracked EURUSD moves with prices dropping from the Asia peak of 1.3881 to 1.3823 in NY trading. UK Nationwide Housing Prices were a tad softer, but not a factor. Instead, GBPUSD direction was determined by broad US dollar sentiment.
USDJPY traded narrowly in a 110.46-110.75 band. A dip in US 10 year Treasury yields from 1.52% to 1.482% weighed on prices, as did weaker than expected Japanese data. The unemployment rate rose to 3.0% in May, compared to 2.9% in April.
US Case Shiller Home Price Index is ahead. The Canadian economic calendar is empty.
Today’s Suggested Range USD/CAD: 1.2320 – 1.2420
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