The Canadian dollar was up and down like the proverbial roller-coaster in the past 24 hours. Traders are taking their cue from U.S. equity markets and crude price action.
Domestic influences continue to take a backseat to the global risk outlook and broad US dollar sentiment.
On Tuesday, U.S. Treasury Secretary Steven Mnuchin and Federal Reserve Chair Jerome Powell appeared before the Senate Banking Committee. Their messages were mixed.
Mnuchin reiterated the over $3.0 trillion in fiscal stimulus measures that the Trump administration implemented to combat the impact of the COVID-19 outbreak. He also said that the government expects "economic conditions to improve in the third and fourth quarters." He preferred to take a wait-and-see approach before implementing any more fiscal stimulus.
Powell took a different approach. He wanted the government to ramp up spending even further. However, he added that the Fed was prepared to act further, if necessary.
Fickle traders were on full display on Wall Street. Monday, they bought stocks on hopes that Moderna Therapeutics would be able to deliver a CVOID-19 vaccine. Tuesday, they decided the vaccine hopes were too optimistic and sold stocks.
The minutes from the Federal Open Market Committee meeting of April 29 are released today. They are not expected to have much impact on FX markets due to the numerous speeches by Fed officials since the meeting data, and because of Powell’s testimony yesterday.
Bank of Canada Deputy Governor Timothy Lane is speaking about "Policies for the Great Global Shutdown and Beyond." Any Canadian dollar reaction to his remarks may be short-lived as it is U.S. dollar sentiment that is driving the currency.
Oil prices got a boost at the end of the day when the American Petroleum Institute report that US crude inventories fell 4.5 million barrels in the week ending May 15.
Reported increases in gasoline usage, and the rapidly easing of lockdown restrictions in major urban centers around the world, have underpinned prices on expectations of rising demand.
NZD/USD was the best performing G-10 currency overnight. Reserve Bank of New Zealand Governor Adrian Orr said that he is prepared for negative rates, but if so, it won’t happen until a lot later.
That was music to the ears of NZD/USD traders who lifted the currency pair from $0.6065 to $0.6136
Canada Consumer Price Index information was released today and was expected to drop 0.6% m/m in April due to low oil prices.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
