The Canadian dollar started the New York session almost unchanged from Tuesday’s close, but has since registered small gains. The US dollar cuts its gains overnight in cautious low volume trades.
The Canadian dollar is benefiting from a surge in West Texas Intermediate (WTI) oil prices, which have risen nearly 5% since Monday. The rally occurred despite the progress of the Organization of the Petroleum Exporting Countries with plans to increase production quotas in early May. The American Petroleum Institute (API) reported that U.S. crude inventories rose 4.3 million barrels during the week ending April 23.
The negative aspects were offset by reports that Goldman Sachs analysts increased their oil price and demand forecast for 2021 amid forecasts of a strong global economic recovery from the pandemic. Rising oil prices capped losses in Canadian dollars.
Bank of Canada Governor Tiff Macklem reiterated his positive outlook for the national economy during testimony before the House of Commons Finance Committee on Tuesday. He said, “We expect strong consumer-led growth in the second half of this year. Federal and provincial government fiscal stimulus will also be a major contributor to growth. Strong foreign demand and rising prices prices of exports and business investment rebound, leading to a broader recovery. We now expect the economy to grow by about 6.5% this year, about 3¾% in 2022 and 3¼% in 2023. ”
His remarks were almost identical to his opening statement at the Monetary Policy Report press conference last week. Still, they were enough to remind traders that Canada could be the first G-10 country to raise interest rates in the post-pandemic world.
The Canadian dollar is unlikely to get much attention from today’s March retail sales data.
Economists are forecasting a gain of 4.0% from the 1.1% drop in February. However, the renewal of COVID-19 restrictions suggests the gain will be reversed in April.
The US Federal Open Market Committee (FOMC) meeting this afternoon should be tame as policymakers maintain their wait-and-see approach.
President Biden addresses Congress tonight at 9:00 p.m. ET to announce his latest $ 1.8 trillion spending plan. Mr. Biden wants to allocate more money to families and pay for this generosity by raising income taxes above $ 400,000.
Yields on 10-year US Treasuries climbed 1.64% from 1.58% yesterday and this move gave the US dollar an offer.
EUR / USD and GBP / USD drifted lower, EUR / USD losses exacerbated by weaker-than-expected German confidence data. The AUD / USD fell on the back of a weak inflation report and was the weakest major G-10 currency overnight.
There are no leading economic reports from the United States or Canada today
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian bureau de change that offers Canadians better rates than banks.