The Canadian dollar is moving forward with difficulty in early Toronto trading. FX volumes are significantly reduced because of holidays around the world. Australia, New Zealand, most of Europe, and the U.K. were closed Friday and again today for Easter Monday. China and Hong Kong markets were shuttered for national holidays.
Friday, the U.S. dollar released a stellar employment report. Non-farm payrolls rose 916,000 in March compared to the forecast for a 647,000 gain. The NFP results for January and February’s data were revised higher as well. Economists expect a similar result for April, and if the trend continues for the rest of the year, the Fed may be forced to raise interest rates far earlier than they expect.
The pace of coronavirus vaccinations in the U.S., combined with the massive stimulus spending announcements, is expected to fuel a robust, consumer fueled economic recovery, which will help lift the global growth outlook.
Oil prices have slipped from last week’s peak but are still relatively firm, with West Texas Intermediate at $60.10 today. Prices are on the defensive after the Organization of the Petroleum Exporting Countries announced gradual production increases starting in May, while Saudi Arabia will phase out its voluntary production cut. Prices continue to be supported by hopes for a global economic rebound.
EUR/USD is trapped in a $1.1700-$1.1800 range. The single currency is suffering from bearish sentiment due to widening E.U. and U.S. interest rate differentials. Prices are further undermined by the European Union’s bungled vaccine roll-out and the latest COVID-19 outbreak, leading to restrictions in many regions. The European Central Bank is adamant for the need for ultra-easy monetary policy to support the economy, while recent U.S. data suggests the U.S. economic recovery is gathering steam.
AUD/USD remains under pressure after falling from $0.7840 in the middle of March. The drop in commodity prices, including iron ore, and China’s hostile trade actions against some Australian imports weigh on the currency pair. The Reserve Bank of Australia monetary policy meeting is Tuesday. Prices traded in a $0.7618-$0.7640 since Thursday’s close.
Traders expect today’s U.S. data to reaffirm the economic recovery outlook. The Institute for Supply Management's Services Purchasing Managers Index, and factory orders are on tap.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
