The Canadian dollar consolidated yesterday’s gains overnight. The loonie is supported by the rebound in crude prices and the positive development of global risk sentiment.
The S&P 500 Index and WTI oil prices returned to their Friday level. Gold prices have erased their last safe haven gains and are trading below minor support in the $ 1,798.00- $ 1,800.00 area.
Traders are much less worried about the spread of the delta variant of the coronavirus, as fewer victims require hospitalization and people with two-dose vaccines are relatively well protected.
West Texas Intermediate (WTI) extended yesterday’s rally and is trading at $ 71.00 in New York. Prices were brought back to a level last seen at the end of May on Tuesday, with traders worried that the spread of delta variants of the coronavirus could derail the global economic recovery and reduce demand.
Traders changed their mind as Delta Variant hospitalizations were low and oil prices rebounded alongside a rebound in stock markets. Gains in oil prices boosted the Canadian dollar and other commodity-related currencies.
The European Central Bank‘s monetary policy decision and President Christine Lagarde’s press conference are as expected as two to one hour at the local pub. Indeed, last week, Lagarde hinted that the markets should prepare for new directions “given the perseverance we need to show to keep our commitment.” A break out of either side of $ 1.1750 or $ 1.1850 will likely result in another 0.0100 point move.
GBP / USD fell from $ 1.3662 in Asia to $ 1.3759 at the start of trading in New York due to the rebound in risk sentiment and the lifting of all COVID-19 restrictions in the UK. GBP / USD should break through resistance in the $ 1.3775-1.3800 area or risk a fall to $ 1.3620.
Japan was closed for Navy Day and is closed Friday for Sports Day. The USD / JPY traded sideways in Asia, then rebounded to 110.35 where it opened in New York, supported by the rise in 10-year US Treasury yields from 1.235% yesterday to 1.295% today .
AUD / USD rose from $ 0.7344 to $ 0.7386. Traders ignored weaker-than-expected NAB business confidence data, focusing on rising commodity prices and a better sense of risk.
Weekly jobless claims in the United States, the Chicago Fed’s activity index and sales of existing homes are ahead. The Canadian data calendar is empty.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian bureau de change that offers Canadians better rates than banks.