Canadian Dollar Update, August 4, 2020 – Canadian Dollar looking for direction
USD/CAD Open: 1.3376-80, Overnight Range: 1.3348-1.3420
WTI Oil is at $41.47 and gold is at $2,021.10. US markets are higher today.
For today, USD resistance is at 1.3388. Support is at 1.3342.
• Choppy US dollar trading due to US/China tensions
• Falling US COVID-19 cases, overshadow delay of new US coronavirus relief package
• End of week employment data key focus
Canadians returned from a long weekend holiday to find the Loonie under pressure from the opening bell.
Traders are buying US dollars and selling stocks, in part because of renewed US/China tensions. President Trump has decided that Tik Tok, a Chinese owned app, is a data mine for the Chinese government. Japan, Australia, the European Union, and India all have issues with the app. The US and China are also feuding over expulsions of journalists, the South China Sea, and COVID-19.
Wall Street rallied on Monday with the NASDAQ making another intraday high. However, a dip in European markets and a drop in US equity futures pointed to a lower open. Nevertheless, a dip is merely profit-taking as the major equity indexes remain at high levels.
The US dollar consolidated Friday’s post 11:00 am fix gains in choppy trading, Monday, started to slide in Europe today and then found its legs in early Toronto trading.
EURUSD peaked Friday, reaching 1.1904, before plunging to 1.1704 on Monday. Profit-taking, and better than expected US ISM PMI manufacturing data drove prices lower. The US data overshadowed Euro area PMI which also rose. The number of new US coronavirus cases fell last week and talk of a vaccine becoming available before the end of the year, weighed on prices.
GBPUSD dropped from its month-end 11:00 am ET fixing peak of 1.3167 to 1.3006 yesterday. Prices rebounded to 1.3075, then fell to 1.3020 in Toronto today. GBPUSD traders ignored Monday’s UK Stock market rally which saw the FTSE 100 index rise 1.86%, and a report showing UK manufacturing output grew at its best rate since 2017. Instead, traders were concerned that last week’s GBPUSD rally was overdone.
USDJPY rallied from 104.25 to 106.41, between Friday and Monday, then consolidated those gains in a 105.80-106.20 range. The rally back above 105.50 sparked stop-loss buying as weak short USDJPY positions were stopped out. The gains were supported by hopes that the US Congress would come to terms for new COVID-19 relief packages, and by the US PMI data.
The Reserve Bank of Australia helped spark an AUDUSD rally that took prices from 0.7076 on Monday to 0.7150 overnight. They left prices unchanged, and the Governor repeated his view that the worst was over for the Australian economy.
There isn’t any data of note today.
Today’s Suggested Range USD/CAD: 1.3330 – 1.3430