Canadian Dollar Update, December 30, 2020 – Canadian Dollar Hanging on to Gains
USD/CAD Open: 1.2781-85, Overnight Range: 1.2749-1.2754
WTI Oil is at $48.31 and gold is at $1,898.60. US markets are higher today.
For today, USD resistance is at 1.2782. Support is at 1.2730.
• Thin markets, uninspired trading, set FX tone for today
• Risk sentiment remains positive on 2021 global economic rebound hopes
• US dollar sliding due to month-end rebalancing flows
The Canadian dollar is attempting to rally, and revisit levels last seen a week ago. It is not alone. All the G-10 major currencies have recorded gains against the US dollar overnight, albeit in thin, year-end markets. USDCAD fell from 1.2825 in Asia to 1.2773 in early Toronto trading today, in part due to equity portfolio managers rebalancing positions for month-end. The nearly 3.0% rise in the S&P 500 index in December suggests portfolio managers need to buy Canadian dollars to bring hedges in-line with their mandates. The Australian dollar and British pound are purchased for the same reason.
The December surge in new COVID-19 cases in Ontario, the US, the UK, and Europe, forced authorities to enact sweeping restrictions to combat the spread and prevent patients from overwhelming emergency rooms.
Elsewhere, the UK approval of the AstraZeneca vaccine, combined with the new Brexit agreement, and ongoing hopes for a new US COVID-19 Relief stimulus package, improved global risk sentiment and undermined the US dollar in the process. Asia equity indexes closed on a mixed note. European bourses have given up early gains and are close to flat, while US futures are still in the green.
GBPUSD climbed from 1.3500 in Asia to 1.3614 in early New York trading, before easing down to 1.3580. Month-end portfolio rebalancing gave GBPUSD an added lift.
EURUSD rallied with an improved tone to risk sentiment. The short term technicals are bullish above 1.2170, with the break above 1.2270 suggesting further gains to 1.2500.
There are not any economic reports on tap today.
Today’s Suggested Range USD/CAD: 1.2730 – 1.2830