USD/CAD - Canadian Dollar Hangs on to Gains

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The Canadian dollar consolidated yesterday’s gains overnight. The loonie is supported by the rebound in crude prices and the positive shift in global risk sentiment.

The S&P 500 index and WTI oil prices are back to where they were Friday. Gold prices have erased their latest safe-haven gains and are trading below minor support in the $1798.00-$1800.00 area.

Traders are far less worried about the spread of the coronavirus delta variant because fewer victims require hospitalization, and people with two-dose vaccines are relatively well-protected.

West Texas Intermediate (WTI) extended yesterday’s rally and are trading at $71.00 in NY. Prices were driven to a level last seen at the end of May on Tuesday as traders feared spreading coronavirus delta-variants would derail the global economic recovery and reduce demand.

Traders changed their mind as delta-variant hospitalizations were low, and oil prices bounced alongside a rebound in equity markets. The oil price gains boosted the Canadian dollar and other commodity currencies.

The European Central Bank monetary policy decision and President Christine Lagarde’s press conference are as eagerly awaited as two-for-one hour at the corner pub. That’s because last week, Ms Lagarde hinted that markets should prepare for new guidance "given the persistence that we need to demonstrate to deliver on our commitment." A break on either side of $1.1750 or $1.1850 will likely lead to another 0.0100 point move.

GBP/USD climbed from $1.3662 in Asia to $1.3759 in early NY trading due to the rebound in risk sentiment and lifting all U.K. COVID-19 restrictions. GBP/USD needs to break above resistance in the $1.3775-1.3800 area or risk a drop to $1.3620.

Japan was closed for the Marine Day holiday and is closed Friday for Sports Day. USD/JPY traded sideways in Asia, then rallied to 110.35 where it opened in New York, underpinned by the rise in U.S. 10-year Treasury yields from 1.235% yesterday to 1.295% today.

AUD/USD rallied from $0.7344 to $0.7386. Traders ignored weaker than forecast NAB Business Confidence data, focusing on higher commodity prices, and better risk sentiment.

U.S. weekly jobless claims, Chicago Fed activity index and existing home sales are ahead. The Canadian data calendar is empty.


Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank’s rates – click here to compare bank rates