USD/CAD - Canadian Dollar Snowed Under| MENAFN.COM

Tuesday, 17 May 2022 11:28 GMT

USD/CAD - Canadian Dollar Snowed Under

(MENAFN- USD/CAD - Canadian Dollar Snowed Under

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- US markets closed-Martin Luther King Day
- China pumps in liquidity
- US dollar opens firm on US rate outlook
USDCAD Snapshot: Open 1.2504-08, Overnight Range-1.203-1.2555, previous close 1.2550, WTI open $83.85, Gold open $1820.93
The Canadian dollar consolidates recent gains in a USDCAD range of 1.2450-1.2550 while tracking broad US dollar sentiment against the major G-10 currencies.
The Canadian dollar continues to benefit from rising oil prices. West Texas Intermediate touched $84.75/barrel overnight as traders continue to expect a recovery in global demand will outstrip supply. China's latest stimulus action also supports oil prices. However, the Iran nuclear talks, which have been ongoing for nearly six months, are a wild card.
The Bank of Canada quarterly Business Outlook Survey is due today. It is unlikely to cause a stir, mainly because the timing of the survey missed the latest Omicron outbreak. Instead, traders will be looking ahead to Wednesday's inflation data. Rising CPI may force the Bank of Canada to raise interest rates at the January 26 meeting, despite the ongoing impact from the omicron variant.
China was a significant focus in Asia. The Peoples Bank of China cut interest rates to help stimulate growth, trimming the 7-Day Repo rate to 2.10% from 2.20%, and the one-year medium lending facility rate to 2.85% from 2.95%.
The news offset concerns from weaker than expected Q4 GDP and Retail Sales numbers. 4Q GDP fell to 4.0% y/y, from 4.9% y/y previously and Dec. Retail Sales were 1.7% y/y, well below the forecast of 3.7%, and November 3.9% y/y result.
Nevertheless, the Chinese economy grew 8.1% y/y, compared to the official target of 6.0%.
G-10 FX traders mostly ignored the news as US markets are closed for the Martin Luther King holiday, giving them an excuse to stay on the sidelines.
EURUSD retreated from its overnight peak of 1.1433 and is trading around where it closed Friday. The single currency continues to suffer from the stubbornly dovish ECB outlook for inflation and ECB interest rates, which sharply contrasts with the Fed's view.
GBPUSD retreated alongside the rest of the G-10 currencies, but the intraday uptrend remains intact above 1.3600. Concerns about Prime Minister Boris Johnson's political problems are more than offset by the outlook for UK interest rates.
A major winter storm sweeping across southern Ontario and Toronto combined with the US holiday, suggests FX markets will be quiet.

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