data showed U.S. consumer inflation heating up in April, with
the loonie ending its longest streak of weekly gains since 2016. The loonie was trading 0.1% lower at 1.2078 to the
greenback, or 82.80 U.S. cents, having traded in a range of
1.2063 to 1.2120. It was also down 0.1% for the week, after
having climbed for eight straight weeks. “We’ve had a really strong run in the Canadian dollar in the
last one or two months,” said Rahim Madhavji, president at
KnightsbridgeFX.com. “It’s hard to see what the next catalyst
for the loonie is going to be going forward.” Speculators have cut their bullish bets on the Canadian
USD/CAD - Canadian Dollar Extends Gains The Canadian dollar is plumbing the depths of three-year lows in early New York trading. Commodity prices continue to climb, leading to some analysts speculating about a commodity super-cycle. That is good news for the Canadian dollar as Canada’s economic growth is still heavily reliant on natural resource exports.
The Canadian dollar continues to grind higher due to expectations for a robust post-pandemic economic boom, fueled by massive fiscal and monetary stimulus from Canadian and U.S. governments, in a low-interest-rate environment.
U.S. Federal Reserve policymakers were out in force yesterday, unanimously pushing back against the notion that the Fed will need to raise interest rates if inflation rises. Fed Vice Chair Richard Clarida said they were still a long way from their goals and now was not the time to talk about tapering. Boston Fed President Eric Rosengren echoed Clarida’s remarks, saying they need to see
USD/CAD - Canadian Dollar Pops Higher The Canadian dollar turned yesterday’s frown upside down. Yesterday, U.S. Treasury Secretary Janet Yellen warned in remarks to The Atlantic , It may be that interest rates will have to rise somewhat to make sure our economy does not overheat, even though the additional spending is relatively small relative to the size of the economy.
That wasn’t what markets wanted to hear. Stocks plunged, and the U.S. dollar soared. The news alarmed the Biden Administration, and Ms Yellen was quick to offer a clarification.
She told the Wall Street Journal that all she was really saying was that any near-term inflation increases would be temporary as they are due to supply chain bottlenecks.
USD/CAD - Canadian Dollar Soaring The Canadian dollar is taking flight thanks to U.S. fiscal stimulus, a dovish Federal Open Market Committee outlook, and rising oil prices.
WTI oil climbed to $64.82 in New York today, from $60.55/b last Thursday. Goldman Sachs analysts forecast even higher prices, as U.S. fiscal stimulus drives a global economic boom, which will increase demand for crude. The Canadian dollar got a bit of a boost on the move.
Overnight, equity traders liked what they heard from President Joe Biden and Fed Chair Jerome Powell. The major Asia equity index closed with gains except for Japanese markets, which were closed for a national holiday. European bourses are trading with gains, and S&P futures are at record highs.
USD/CAD - Canadian Dollar Firms Ahead of FOMC The Canadian dollar started the New York session nearly unchanged from Tuesday’s close but has since eked out small gains. The U.S. dollar is paring its overnight gains in cautious, low-volume trading.
The Canadian dollar is benefitting from a jump in West Texas Intermediate (WTI) oil prices, which have risen nearly 5% since Monday. The rally occurred despite the Organization of the Petroleum Exporting Countries moving forward with plans to raise production quotas at the beginning of May. The American Petroleum Institute (API) reported U.S. crude inventories rose 4.3 million barrels in the week ending April 23.