The Canadian dollar is trading near a three-year peak. USD/CAD closed on Friday at $1.2690 and touched $1.2611 today, with a spike in West Texas Intermediate (WTI) oil prices, contributing to the slide. The U.S. dollar is under pressure against the G-10 majors and opened in New York with losses across the board.
WTI oil surged to $60.92/barrel yesterday as a massive, nasty winter storm roared through Texas, across most of the U.S. and a large part of Canada. Power outages across Texas also shut down oil refineries and drilling rigs, which led to the spike in crude prices. Prices have already retreated from the top.
The greenback is being sold due to expectations of a post-pandemic global economic recovery, and ongoing hopes for a massive U.S. stimulus package. However, the U.S. dollar may find a bid thanks to rising U.S. Treasury yields which are trading at 1.25% in New York Bond traders are concerned about rising inflation, but the Federal Reserve continues to push back against that view. Fed Chair Jerome Powell and colleagues say that any increase in inflation is temporary. Markets hope for more clarity on the issue tomorrow when the minutes from the January 27 Federal Open Market Committee meeting are released.
EURUSD climbed from $1.2114 in Asia, Monday to $1.2167 in Europe, on the back of broad U.S. dollar weakness and better-than-expected German ZEW Survey results.
The press release said "Economic Sentiment increased again considerably in the current February 2021 survey, climbing 9.4 points to a new reading of 71.2 points compared to January." ZEW President Achim Wambach said "The financial market experts are optimistic about the future. They are confident that the German economy will be back on the growth track within the next six months. Consumption and retail trade in particular are expected to recover significantly, accompanied by higher inflation expectations."
GBP/USD extended its February gains again, rising from Friday’s closing rate of $1.3854 to $1.3950 in Europe before sliding to $1.3913 in New York trading. GBP/USD continues to benefit from global investment flows and expectations for a robust economic recovery, thanks to their COVID-19 vaccination program’s effectiveness.
USD/JPY is chopping about around the 200-day moving average at 105.53.
Prices are underpinned by rising U.S. Treasury yields.
The minutes from the February 2 Reserve Bank of Australia monetary policy meeting, did not do anything to impact AUD/USD, leaving it to rally on the back of U.S. dollar weakness.
There are not any top-tier economic data releases in Canada or the U.S. today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians.
