The Canadian dollar continues to bounce around either side of 80 cents U.S. but maintains its bullish bias.
Finance Minister Chrystia Freeland tabled the first budget in over two years at the close of business on Tuesday. It is a 724-page document titled "A RECOVERY PLAN FOR JOBS, GROWTH, AND RESILIENCE." The piece is rife with projections, forecasts, and promises, with very few of them ever seeing the light of day. It is called a budget, but it reads like a very long election pamphlet.
To be fair, every political party since Confederation has done the same thing, which is why FX traders ignored the news.
Global equity indexes slumped, in part due to profit-taking after most of the indices were at or near record-high levels. Japan’s Nikkei 225 lost 1.97%, and Australia’s ASX 200 dropped 0.68%. European bourses opened in the red and continued to slide, while S&P 500 futures are down, but off their worst levels. Gold prices are consolidating recent gains while WTI oil prices traded higher.
USD/CAD traded erratically in a $1.2480-$1.2538 range. It bottomed out in Asia and peaked in early New York trading today, with price action dictated by broad U.S. dollar moves vs the majors. USD/CAD continues to trade defensively as traders look ahead to a robust, post-pandemic economic boom supported by Canadian and U.S. government stimulus packages and higher crude prices.
The Bank of Canada is widely expected to leave interest rates and monetary policy unchanged at their meeting Wednesday. However, analysts expect policymakers to begin tapering Quantitative Easing purchases. It should be currency neutral because monetary policy will remain accommodative.
EUR/USD is sitting in the middle of its overnight $1.2037-$1.2079 range. The single currency climbed alongside broad US dollar selling, but traders are cautious ahead of Thursday’s European Central Bank monetary policy meeting., even though they expect a tame outcome.
GBP/USD extended yesterday’s gains and climbed to $1.4008 from a closing level of $1.3969. Prices got a little support from better-than-expected U.K. trade data, although many analysts suggested government employment policies skewed the results. GBP/USD gave back its overnight gains in early New York trading.
USD/JPY bounced from support in the 108.00 area and climbed to 108.54 in part because U.S. 10-year Treasury yields climbed.
AUD/USD rallied due to widespread U.S. dollar selling pressures. The Reserve Bank of Australia minutes from the April 6 meeting did not offer any new insight and were dismissed.
There are not any notable Canadian or U.S. economic reports released today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
