The Canadian dollar is directionless inside a USD/CAD $1.2050-$1.2150 band. Even so, the Canadian dollar has gained the most against the US dollar year to date. Sentiment remains positive thanks to high commodity prices.
The S&P Goldman Sachs Index (S&P GSCI), a benchmark for commodities investments gained 28%, this year, as iron ore, copper, and lumber flirt with all-time highs West Texas Intermediate (WTI), the North American benchmark price, climbed 40% since the beginning of January and analysts expect even higher prices from a post-pandemic global economic rebound.
At the April 21 monetary policy meeting, the Bank of Canada said it would raise interest rates sooner than expected. That message may be reinforced on Wednesday when the latest inflation data is available.
Overnight, FX markets were directionless inside recent ranges. Chinese April Retail Sales 17.7% y/y (forecast 24.9%, March 34.2%) and Industrial Production 9.8% y/y (forecast 9.8%, March 14.1%) suggested that the economy may be slowing. The news undermined AUD/USD and NZD/USD which opened in NY with losses compared to Friday’s close.
Elon Musk knocked Bitcoin for a loop after a tweet implied Tesla would dump its holdings of the cryptocurrency. BTC/USD fell from $49,814.01 to $42,212.56, but recovered to $45,013.86 after Musk tweeted: "To clarify speculation, Tesla has not sold any Bitcoin."
European equity markets are in the red and S&P 500 futures suggest a negative open on Wall Street, in part due to concern about higher U.S. interest rates as Treasury yields inch higher.
EUR/USD is retreating from its overnight peak, while maintaining an upward bias while prices are above $1.2080, due to firming Treasury yields. Italy and Spain are easing COVID-19 restrictions which may limit the downside.
GBP/USD is in the middle of its overnight $1.4080-$1.4118 range with traders marking time ahead of the U.K. employment report Tuesday and inflation data on Wednesday. Prices are supported by news the economy will fully reopening in June.
USDJPY traded in a 109.09-109.49 range. Traders are concerned ongoing coronavirus issues in major urban areas but ignored domestic data. Japan’s Producer Price Index rose 0.7% m/m in April compared to 0.6% m/m in March.
Today’s U.S. data includes NAHB Housing Price Index and Empire State Manufacturing Purchasing Managers Index.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
