The Canadian dollar outlook soured overnight.
The United States, European Union, United Kingdom, and Canada imposed sanctions on some Chinese officials due to China’s treatment of Uyghur Muslims.
China and Russia issued a joint statement that said countries should refrain from politicizing human rights.
Traders turned risk-averse due to the latest round of COVID-19 restrictions and lockdowns imposed in many European regions. German Chancellor Angela Merkel said the country was in "a new pandemic," halted reopening measures and announced stricter Easter lockdown rules.
The Biden administration is reportedly planning another stimulus package, this one worth $3.0 trillion. The money will be spent on infrastructure projects and additional benefits for families and students. Traders were concerned about soaring US debt levels and ignored the economic benefits.
The Canadian dollar was undermined by a steep drop in West Texas Intermediate oil prices which fell from $61.32 to $58.50/barrel. Traders were concerned that the latest coronavirus outbreak in Europe, combined with escalating geopolitical tensions, would delay the recovery in global crude demand.
Traders are also cautious ahead of Federal Reserve Chair Jerome Powell’s testimony to Congress today. The text of his opening remarks was released yesterday afternoon. He didn’t deviate from the "low rates for longer" mantra, saying, "the recovery is far from complete, so, at the Fed, we will continue to provide the economy the support that it needs for as long as it takes."
The New Zealand government announced a $3.2-billion initiative to improve housing affordability for first-time homebuyers while curbing real estate speculation. Canadian dollar traders took notice ahead of a speech by Deputy Governor Toni Gravelle.
The title of his speech is "The role of the Bank of Canada in responding to market-wide stress." One of those stresses could be domestic house prices which have soared in the major urban centers.
EURUSD fell from $1.1940 to $1.1886 in New York trading due to bearish sentiment, stemming from new lockdown measures in many parts of Europe and the dovish European Central Bank outlook.
GBPUSD dropped from $1.3863 to $1.3753 despite a better-than-expected unemployment rate of 5.0%, compared to 5.2%.that was predicted.
Powell’s congressional testimony is the key focus. Today’s data includes U.S. New Home Sales.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
