Canadian Dollar Update, August 5, 2020 – Canadian Dollar soars
USD/CAD Open: 1.3249-53, Overnight Range: 1.3233-1.3331
WTI Oil is at $42.35 and gold is at $2.047.60. US markets are higher today.
For today, USD resistance is at 1.3337. Support is at 1.3220.
• Gold roars higher
• US dollar under pressure from several fronts
• EURUSD supported by Retail Sales data
The Canadian dollar surged overnight, blasting through USDCAD support between 1.3310 and 1.3330, for a 0.52% gain between Tuesday’s close and today’s open. And that wasn’t even the best performance. Those honours go to the Australian dollar, which gained 0.76%.
The Canadian dollar is merely a stowaway on the downhill US dollar train. The US dollar is being sold against all the major G-10 currencies, although further downside may be limited ahead of Friday’s US employment report.
US nonfarm payrolls are expected to rise 1.6 million which at first blush sounds good. However, it will still leave 13 million jobs lost since March.
Canada is expected to gain 400,000 jobs leaving 1.762 million still unemployed since March. Neither report is conducive to supporting their currency.
US government officials are busy trying to score election points at the expense of the unemployed.
The emergency CARES Act, created to help ease the burden of layoffs due to the pandemic, expired last Friday.
Congress has not approved a replacement deal. Markets are concerned that the lack of financial support to workers will derail the nascent US economic recovery, and are aggressively selling US dollars.
The Canadian dollar is also benefitting from US dollar selling, as it has boosted crude oil prices. West Texas Intermediate climbed to $42.37 from $41.50 overnight.
AUDUSD and NZDUSD were in demand, and the Canadian dollar went along for the ride. New Zealand reported a better than expected unemployment rate of 4.0% (forecast 4.2%) which underpinned NZDUSD. AUDUSD rallied on the strength of the Caixin China Services PMI report which showed the June data at 54.1, which is in expansion territory.
EURUSD traded with a positive bias in a 1.1795-1.1861 range and opened near the topo in Toronto. Eurozone Retail Sales rose 5.7% m/m, following the 20.5% gain in May. Some analysts warn that the gains merely reflect pent-up demand due to the previous lockdowns.
GBPUSD is trading at the top of its 1.3059-1.3131 range as concerns about a second-wave of coronavirus infections are ignored. UK Services PMI data was 56.5 compared to 47.1 in June.
US ISM Non-manufacturing and ADP payrolls reports are due.
In Canada, the Merchandise Trade deficit is expected to widen -$0.680 billion to $0.9 billion.
Today’s Suggested Range USD/CAD: 1.3200 – 1.3300