December 1, 2021

USD/CAD – Canadian Dollar Opens Nearly Unchanged

3 min read
The Canadian dollar is poised to end a volatile trading week as the best performing...

The Canadian dollar is poised to end a volatile trading week as the best performing G-10 currency.

The Australian dollar is the worst, having fallen 1.75{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} since Monday’s open. USD/CAD bounced in a $1.2048-$1.2204 range, but the currency pair is not far from unchanged on the week despite the volatility.

Bank of Canada Governor Tiff Macklem is responsible for USD/CAD spiking to $1.2204 yesterday after he replied to a question about the currency’s value. He said that continued appreciation of the Canadian dollar could be a headwind to thebank’s export projection and it could have a material impact on the economic outlook and monetary policy. Prices quickly retreated as Macklem was only stating the obvious.

The major Asia equity indexes closed with gains led by a 2.32{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} rise in Japan’s Nikkei 225. European stock markets are ticking higher into the U.S. Retail Sales data, and S&P 500 futures suggest a positive open for Wall Street. Crude oil and gold prices are firm, while 10-year Treasury yields are steady at 1.64{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d}.

EURUSD traded in a $1.2072- $1.2128 range supported by softer 10-year U.S. Treasury yields and by the improved risk tone. EUR/USD has a positive bias above $1.20540.

GBP/USD bounced in $1.4038-$1.4075 range. Yesterday, Bank of England Governor Andrew Bailey said bank members are “already seeing a strong U.K. recovery” and that higher inflation will not persist. He added that interest rates would remain low.

USD/JPY continues to consolidate its post-U.S. Consumer Price Index gains, trading in a 109.26-109.65 range overnight as US inflation fears underpin prices.

AUD/USD consolidate earlier losses in a $0.7716-45 range and trades with a negative bias below 0.7760. AUD/USD is undermined by a drop in iron ore prices after reports China has told steel manufacturers to control price surges or face stiff penalties. NZD/USD outperformed its Australian cousin even though New Zealand Manufacturing Purchasing Managers Index dipped to 58.4.

Canada Manufacturing Sales are expected to rebound to 3.5{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} m/m in March after falling 1.6{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} in February.

Wholesale Sales will improve to 1.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} from a 0.7{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} drop. Neither report should have an impact on the Canadian dollar. The focus is on U.S. Retail sales, which analysts expect to rise 1.0{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} m/m in April. The result will be well below the 10{e5fab30bc1af2ab9862fe5c16f5be581fd243b6ad78468b48e940aadfb2b849d} surge in March but strong enough to suggest the U.S. economy is recovering rapidly.

Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians

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