Will Canada’s budget affect Canadian dollar?

Kenny Fisher MarketPulse

The Canadian dollar had a quiet week, as the currency continues to trade close to the 1.25 level. In the European session, USD/CAD is trading at 1.2495, down 0.10% on the day.

Budget to focus on Covid-19

The Trudeau government will table a budget on Monday, the first in two years. The budget is expected to provide billions of dollars for pandemic aid programs and subsidies, as Canada battles a third wave of Covid-19 which will undoubtedly have a negative impact on the economy. The budget will provide a clear picture of the state of the country’s finances, and if the situation is worse than expected, the Canadian dollar could lose ground today.

There is also a political twist to the upcoming budget, since the ruling Liberals have a minority government and the budget can only pass with the support of the opposition NDP. The latter is expected to support the budget in order not to trigger an election during Covid, but a federal election is not far from anyone’s mind.

Despite a sluggish vaccine rollout, Canada’s economy is finding its feet. The construction industry is showing improvement, as Building Permits rose in March to 1.77 million, up from 1.68 million. Housing Starts will be released later in the day (12:30 GMT) and is expected to climb to 254 thousand, up from 246 beforehand. Canada is experiencing a housing boom and soaring house prices, a result of better economic conditions while interest rates remain at ultra-low levels.

Looking ahead, Wednesday will be busy, with the Bank of Canada rate decision and CPI reports.

USD/CAD technical

There is weak support at 1.2446. This is followed by support at 1.2386.
On the upside, we have resistance at 1.2598 and 1.2690.

Author

Kenny Fisher

MarketPulse

A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.