Canadian Dollar Update, August 6, 2020 – Canadian Dollar bounces off resistance
USD/CAD Open: 1.3269-73, Overnight Range: 1.3243-1.3323
WTI Oil is at $42.12 and gold is at $2,064.00. US markets are lower today.
For today, USD resistance is at 1.3369. Support is at 1.3228.
• Profit-taking ahead of employment data sinks commodity currencies
• Bank of England leaves rates and policy unchanged
• US dollar grinding higher ahead of weekly jobless claims
The Canadian dollar bounced off resistance in the USDCAD 1.3230 area yesterday and has been drifting lower since. Canada’s Merchandise Trade deficit widened to $3.19 billion from -$1.33 billion and combined with a whopping $348.0 billion budget deficit, doesn’t bode well for future currency gains if it persists.
US weekly jobless claims data showed a fall to 1.19 million today from 1.44 million last week.
President Trump’s administration has failed to find a replacement for the expired CARES Act, which is leaving millions of unemployed Americans in the lurch. The Democrats and Republicans are grandstanding, hoping to score election points. President Trump is threatening to act unilaterally, considering plans for eviction protection and payroll tax cuts. The political impasse is undermining the US dollar.
Overnight, FX markets didn’t stray too far from where they closed. COVID-19 flare-ups in France, Britain and the US are cause for concern, as are ongoing China and “most of the free-world” hostilities. It wasn’t enough to spark a US dollar rally, but it put the brakes to broad US selling.
The major Asian equity indexes closed with small losses, and European bourses are also in the red. US equity futures are also down. WTI oil traded in a $41.64-$42.42/barrel range and underpinned by the weak US dollar and Wednesday’s news that US crude inventories fell by 7.37 million barrels. Gold (XAUUSD) traded steady in a $2043.89-$2053.91 range supported by the weak US dollar, low global interest rates, and a dash of safe-haven demand from geopolitical tensions.
The Bank of England said the second-quarter economic slump was “less severe” than feared. They upgraded the 2020 forecast for unemployment from 10.0% to 7.5% and improved their 2020 growth forecast to -9.5% from -14%. Governor Baily appeared to dismiss negative interest rate concerns when he said he “did not think we are about to use negative rates, that is not the current plan.”
There are no Canadian economic data releases scheduled today.
Today’s Suggested Range USD/CAD: 1.3220 – 1.3320