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Tuesday, 11 May 2021 11:11 GMT

USD/CAD - Canadian Dollar Drifts Lower


(MENAFN - Baystreet.ca) The Canadian dollar gave back yesterday's gains overnight despite a surge in crude oil prices.
West Texas Intermediate jumped from yesterday's low of $62.95/barrel to $65.82 in early New York trading today. The gains result from improved optimism about the global post-pandemic recovering boosting oil demand., with the sentiment supported by the latest China Purchasing Managers Index data. Prices are underpinned despite the easing of tensions with Iran which could result in increased supply.
The Canadian dollar rallied following the April 21 Bank of Canada monetary policy statement. The BoC sharply increased its 2021 Gross Domestic Product growth forecast and brought forward the timing of its next rate increase. That news and broad U.S. dollar weakness sent the loonie soaring. However, that story is getting old, especially since the possibility of a Canadian rate hike is still a year and a half from now.
USD/CAD bounced from $1.2278 in Asia to $1.2332 in early New York trading, supported by U.S. dollar demand against the major G-10 currencies.
It was another quiet session overnight, thanks to ongoing holidays in Japan and China. European equity indexes have climbed from earlier lows and are trading modestly higher. S&P 500 Futures are in the red gold is near session lows, oil prices are higher, and U.S. 10-year Treasury yields have inched down from their overnight peak.
Yesterday, U.S. Federal Reserve Chair Jerome Powell and New York Fed President John Williams reiterated Federal Open Market Committee monetary policy would remain unchanged for a considerable period as the Fed was a long way from achieving its goals.
EURUSD dropped from $1.2064 to $1.2000 in early New York trading, erasing yesterday's gains. There were not any economic updates leaving bearish technicals and profit-taking to drive direction.
GBP/USD is trading at its session low of $1.3853 in New York trading after falling from $1.3908. UK final Manufacturing PMI was 60.9, which was close to expectations. However, the news raised speculation the Bank of England might revise its forecasts higher at Thursday's monetary policy meeting.
USD/JPY rallied from 109.04 to 109.48, supported by 10-year US Treasury yields climbing to 1.62% from 1.58%.
AUDUSD sank to $0.7710 from $0.7699, despite a mildly hawkish tweak to the Reserve Bank of Australia outlook. The RBA left monetary policy and interest rates unchanged but upgraded its growth outlook. The results were overshadowed by broad U.S. dollar demand. Some analysts suggested that the statement tweaks implied the RBA might discuss tapering at its July meeting.
U.S. and Canada Trade data is due today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians



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