The Canadian dollar is trading firmer, as it rides another positive risk sentiment wave. There wasn’t much in the way of actionable economic data overnight, FX leaving traders to find direction elsewhere. They found it in the cryptocurrency space. Bitcoin (BTC/USD) soared overnight, rising to $48,000. It was $38,000 yesterday. Prices soared after Tesla (NASDAQ:TSLA) announced it had bought $1.5 billion. Some analysts believe that other large investors will follow Tesla’s lead.
The Canadian dollar is benefiting from bearish USD/CAD technicals. They suggest that the break below $1.3055, which is the 61.8% Fibonacci retracement level of the September 2017-March 2020 USD/CAD range, point to further losses to 1.2675. The intraday technicals are also bearish and looking for a break of USD/CAD support at $1.2710 to target $1.2550.
Global FX sentiment is positive due to elevated expectations for a robust post-pandemic, global economic boom as vaccine roll-outs allows economies to reopen. The Canadian dollar is benefitting from that sentiment even though Canada’s recovery is likely to lag that of other nations due to the Federal government’s failure to obtain vaccine delivery.
Yesterday, Cleveland Federal Reserve President Loretta Mester repeated the Federal Open Market Commitee mantra that U.S. monetary policy would remain unchanged until the economy recovers from the pandemic. She added that reducing the level of support will not happen soon.
EUR/USD rallied to $1.2116 from $1.2046 overnight but has since slipped to $1.2097, in part because U.S. equity futures have pared gains. The gains occurred on the heels of dropping numbers of new coronavirus cases worldwide, even though Europe still has major virus issues, including a botched vaccine roll-out.
The EUR/USD technical picture turned positive with the break above resistance at 1.2070
GBP/USD continued to drive higher touching $1.37888, as the currency continues to benefit from last weeks Bank of England monetary policy announcement.
The BoE issued a rather positive outlook for the domestic economy and appeared to dispense with the notion of negative interest rates in the near future. Britain is well ahead of its G-10 competitors in the vaccination race, which suggests its economy will rebound quicker than others.
There are not any U.S. or Canadian economic reports of note available today.
Traders will take direction from bond, and equity markets while watching the Trump impeachment trial.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
