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Canadian Dollar Update, April 8, 2020 – Canadian Dollar in consolidation mode

USD/CAD Open: 1.4010-14, Overnight Range: 1.3985-1.4081

Oil is at $24.88 and gold is at $1,692.20. US markets are higher today.

For today, USD resistance is at 1.4061. Support is at 1.3987.

• European equity indexes paring losses as S&P futures inch higher
• Oil prices are off their overnight lows but well below yesterday’s levels
• EU Finance ministers unable to agree to COVID-19 response
• Canadian dollar drifts higher in early Toronto trade

The Canadian dollar came under pressure in Asia when West Texas Intermediate (WTI) oil prices plunged.

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The American Petroleum Institute announced that US crude inventories rose 11.93 million barrels in the week ending April 3, following the previous week’s increase of 10.48 million barrels.

WTI dropped from $24.60/barrel to $23.85/barrel on the news. Prices recovered quickly and reached $25.26/b just before Europe opened. USDCAD climbed from 1.3993 to 1.4080 during that time.

USDCAD traders in Europe ignored slumping crude prices and sold the currency pair on the back of minor profit-taking, as the greenback reversed its Asia gains.

COVID-19 headlines and individual government fiscal and monetary policy responses to the pandemic continue to drive FX markets, and price moves are exaggerated by lower than usual liquidity.

Japan was the latest government to step up to the plate. Yesterday, they detailed their fiscal stimulus plans. A Reuters article suggests that the Bank of Japan will forecast a 2.1% economic contraction in 2020. Markets took the news in stride as global economic weakness from the pandemic is not a surprise. USDJPY bottomed out in Asia at 108.52 and opened in Toronto at 108.85.

EURUSD traded in a 1.0831-10901 band with traders unable to pick a direction. Prices inched higher into the Toronto open alongside US equity futures punching into positive territory. However, gains were capped on disappointment that EU Finance ministers were unable to agree to a unified COVID-19 response. UK, Spain and France officials said there wasn’t any plans for lifting the coronavirus confinement measures.

GBPUSD is locked in a 1.2160-1.2460 band. GBPUSD gains are limited by uncertainty around the EU/UK trade talks.

Today’s Suggested Range USD/CAD: 1.3960 – 1.4060

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By KBFX | April 8, 2020 | Daily Update | 0 comments