Source: Pixabay

July 21, 2021

Canadian dollar gains 0.58%, best performing major G-10 currency since Tues. open

Global equities rebound, WTI oil rises, US 10-year Treasuries rise to 1.247%

US dollar opens with losses compared to Tuesday.

USDCAD open 1.2683-87, Overnight range, 1.2672-1.2728,  Previous close 1.2681

FX at a Glance

Source: IFXA/RP

FX Recap and outlook

Pandemic fears filled the actionable, top-tier US data void on Monday, sparking a stock market meltdown and a US dollar rally.  Wall Street rebounded yesterday, recouping most if not all of Monday’s losses, but 10-year Treasury yields were soft, touching 1.126%, and the US dollar stayed bid.

Today is shaping up to be a replay of yesterday, although price action may be a tad choppier. 

European equity indexes are trading higher, led by a 1.53% rally in the UK FTSE 100.  DJIA and S&P 500 futures are posting gains, and 10-year Treasury yields have climbed to 1.247% from an overnight low of 1.138%.

Gold prices do not reflect safe-haven demand as they cannot crack resistance in the $1830.00 level and are hovering above support in the $1797.00 zone.

WTI oil tested February uptrend line support at $65.20/barrel yesterday.  It held, and prices have bounced to $68.00 in early NY trading.

Concerns of slowing global growth because of the spread of the coronavirus delta variant and increased Opec production weighed on prices.  However, expectations that the latest coronavirus scare will fade are helping to put a floor on the downside.

EURUSD continues to tease bears as it flits around the 1.1770 support area.  The single currency fell from 1.1782 in Asia to 1.1752 in Europe before bouncing to 1.1772 in early NY.  Coronavirus fears and the countdown to Thursday’s ECB meeting are weighing on prices.

GBPUSD bounced between 1.3593 and 1.3641.  Dovish comments from BoE officials, rising COVID-19 cases, and renewed tensions with the EU over the Northern Ireland border GBPUSD negatives.  The uptrend line from March 2020 has contained the downside at 1.3565.

USDJPY continues to climb after touching 109.40 on Monday, reaching 110.19 in NY today.  The bounce in Treasury yields and an easing of safe-haven demand for yen are underpinning prices.

AUDUSD dropped from 0.7339 to 0.7291 after June Retail Sales were worse than expected, falling 1.8% m/m (consensus forecast 0.5% decline). The news was quickly forgotten as global equities rallied and risk sentiment improved.

USDCAD has been the worst and the best performing currency on different days this week.  Today, it is the worst, after losing 0.53% since Tuesday’s NY open.   The ebbing and flowing of risk sentiment, WTI oil price,  and the S&P 500 drive price action.  That will continue to be the case today.

The US economic data calendar is empty. 

USDCAD technical outlook

There  intraday USDCAD technicals are bullish above 1.2660 which is a minor uptrend line from July 15, looking for a move above 1.2730 for another test of 1.2800.  A break below 1.2660 targets 1.2580. For today, USDCAD support is at 1.2660 and 1.2610.  Resistance is at 1.2730 and 1.2780.   Today’s range 1.2650-1.2710

Chart USDCAD 4 hour

Source: Saxo Bank

FX open, high, low, previous close

Source: Saxo Bank