Canadian Dollar Update, August 10, 2020 – Canadian Dollar playing defence
USD/CAD Open: 1.3385-89, Overnight Range: 1.3333-1.3394
WTI Oil is at $42.23 and gold is at $2,039.00. US markets are mixed today.
For today, USD resistance is at 1.3369. Support is at 1.3326.
• FX traders ignoring rising stock markets, today
• Trump uses executive powers to provide unemployment relief
• US dollar bid on rising global tensions
President Trump used his executive power to help support unemployed workers. He announced he would provide COVID-19 relief benefits of $400.00 per week, and asked that States add $100.00 to the payment. He also delayed the employee portion of payroll taxes from August 1 to December 31, 2020. Democrats are questioning the legality of the move.
The news helped lift European equity indexes, and S&P futures point to a positive open on Wall Street. Asia equity markets were subdued as Japan and Singapore were closed.
The US dollar was already in demand following Friday’s US employment report which surprised to the upside. US employment rose by 1.8 million while the unemployment rate dipped to 10.2%. As of July, total nonfarm employment is 12.9 million, which is still lower than what is was in February.
The Canadian dollar was undermined by the US results and didn’t get any benefit from the somewhat robust domestic employment results. The unemployment rate in Canada fell 1.4% to 10.4%, the second consecutive decline.
Chinese data helped support AUDUAD and NZDUSD, which were suffering from risk aversion selling pressure.
China’s PPI and CPI reports were a tad better than forecast. USDJPY traded quietly and consolidated Friday’s gains near the top of its range.
EURUSD continues to retreat after failing to extend gains above 1.1900 last week. Prices are undermined by rising speculative long EURUSD positioning, and risk aversion demand for US dollars because of China/US tensions. There are reports of €3.0 billion in option expiries today, which should cap topside moves until 10:00 am.
GBPUSD is trading in the middle of its 1.3020-1.3086 range ahead of Tuesday’s UK employment report and the Q2 GDP report on Wednesday.
Canadian dollar direction continues to be at the whim of broad US dollar sentiment. USDCAD is trapped in a 1.3230-1.3510 trading range. Canadian dollar sentiment is bearish due to the US imposing tariffs on Canadian aluminum imports.
There are not any Canadian or US data releases on tap today.
Today’s Suggested Range USD/CAD: 1.3340 – 1.3430