The Canadian dollar lost ground in Asia overnight, but recovered its losses in early New York trading. It is the last day of the first half of 2021, and the Canadian dollar is a superstar. The loonie gained 2.13% since January 4, making it the best-performing G-10 major currency. The Japanese yen was the worst, shedding 7.51% of its value in the same period.
Canada April Gross Domestic Product is expected to have dropped 0.8% m/m. The decline is due to restrictive measures imposed to combat the third wave of the coronavirus pandemic, so the result should not impact the currency.
Coronavirus delta variant outbreaks in Australia, U.K. and other regions injected a note of caution into overnight markets. The U.S. dollar added to yesterday’s gains at the New York open, except against JPY. In Asia, the Nikkei and Hang Seng closed in negative territory, while China’s Shanghai Shenzhen CSI 300 and Australia’s ASX 200 closed higher. European bourses are lower, led by a 0.90% dip in Germany’s DAX index. S&P 500 futures are off their worst levels and flirting with unchanged but are poised to end the month with a 2.0% gain. WTI oil inched higher, while gold prices are a tad lower. U.S. 10-year Treasury yields lid to 1.453% from 1.504%.
EUR/USD dropped from $1.1908 to $1.1885 in Europe and opened at the low in NY. Eurozone Consumer Price Index was 1.9% y/y, as expected, but it was a tick slower than the European Central Bank target and the May result. German unemployment dropped, a sign of an improving domestic economy, but traders ignored the news. They were guided by bearish technicals, looking for a breach of $1.1840 while prices are below $1.1910.
GBP/USD dipsy-doodled, falling from $1.3858 in Asia to $1.3817 in Europe on news that UK Q1 GDP shrank 1.6% q/q, a tick weaker than the 1.5% expected. Prices rebounded to 1.3872 into the New York session, in part because of month-end and quarter-end demand for GBP. Spiking delta-variant COVID-19 cases in the UK are a drag on GBP/USD gains.
AUD/USD and NZD/USD were weighed down by softer commodity prices, and risk aversion after Australia imposed new lockdown measures to combat a wave of COVID cases.
U.S. Chicago Purchasing Managers Index and Pending Home Sales data are released today. Canada data includes Raw Material Price and Industrial Product Price indexes.
Happy Canada Day. No update tomorrow.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
