Canadian Dollar Update, August 24, 2020 – Canadian Dollar rises
USD/CAD Open: 1.3152-56, Overnight Range: 1.3134-1.3224
WTI Oil is at $42.61 and gold is at $1,940.10. US markets are higher today.
For today, USD resistance is at 1.3251. Support is at 1.3186.
• Global risk sentiment improves slightly
• Markets looking ahead to Jackson Hole Symposium, Thursday
• US dollar is on the defensive in early trading
The Canadian dollar is inching higher in early Toronto trading. USDCAD closed Friday at 1.3178 and prices drifted lower due to broad US dollar weakness compared to the major G-10 currencies. Canada Retail Sales data, released Friday, were as impressive as predicted, rising 23.7% in June. Pent-up demand from the coronavirus lockdowns fueled the gains which boosted sales to above pre-pandemic levels.
The Progressive Conservative party elected Erin O’Toole, replacing Andrew Scheer as leader. The news was not a factor in FX markets.
Instead, traders were looking ahead to the annual Jackson Hole Symposium, hosted by the Federal Reserve Bank of Kansas City. It begins on August 27.
This year’s summit is different as it is an online event. The theme is “Navigating the Decade Ahead: Implications for Monetary Policy”. As usual, there are a lot of speeches by central bankers. Bank of Canada Governor Tiff Macklem, Fed Chair Jerome Powell, and Bank of England Governor Andrew Baily speeches will be followed closely. Headlines from the lectures could spark FX volatility.
EURUSD is trading at the top of its 1.1786-1.1846 range, bolstered by improved global risk sentiment. Reports that President Trump wants to fast-track and experiment UK COVID-19 vaccine boosted hopes for an early end to the coronavirus crisis. The gains are underpinned by expectations a Eurozone recovery will outperform that of the US, mainly because US politicians are focused on the upcoming election, and not the economy. Thursday increase in Jobless Claims numbers supports the view that economic growth is stalling. However, EURUSD gains are being capped ahead of significant resistance in the 1.2000-1.2010 area. That is due in part because of geopolitical concerns, which include an escalation of tensions between Greece and Turkey. Also, political turmoil in Belarus pits Russia against the EU.
GBPUSD hasn’t recovered from Friday’s plunge from 1.3260 to 1.3059. Fears of a “No-Deal” Brexit soared when EU Chief Negotiator Michel Barnier warned he didn’t think an agreement was likely. GBPUSD climbed to 1.3135 in Toronto today, due to broad US dollar selling pressures.
USDJPY traded sideways in a narrow 105.70-93 range. Improved global risk sentiment supported prices while soft US Treasury yields capped gains.
AUDUSD outperformed New Zealand and Canadian dollars. NZDUSD dipped following weak Retail Sales data, while the ultra-dovish outlook by the central bank continues to pressure the currency.
The US and Canadian economic calendars are empty today.
Today’s Suggested Range USD/CAD: 1.3150 – 1.3250