Canadian Dollar Update, December 9, 2020 – Canadian Dollar Dancing with Resistance
USD/CAD Open: 1.2785-89, Overnight Range: 1.2769-1.2832
WTI Oil is at $45.61 and gold is at $1,839.40. US markets are lower today.
For today, USD resistance is at 1.2856. Support is at 1.2763.
• Reports of progress in US COVID-19 Relief talks support positive risk sentiment
• GBPUSD soars ahead of Leaders dinner today
• US dollar recouping some of overnight losses in Toronto trading
The Canadian dollar continues to dance around resistance, as it follows the lead of its antipodean counterparts. USDCAD closed at 1.2820 yesterday and declined steadily overnight, erasing all of yesterday afternoon’s gains. Nevertheless, the price action is just noise inside the 1.2765-1.2830 range that has contained price action since December 4.
The Bank of Canada is expected to leave interest rates and monetary policy unchanged today. There won’t even be a press conference. There is a risk that the statement could focus on downside risks to their outlook, thanks to the second wave pandemic outbreak in Canada. Even so, USDCAD direction is dictated by broad US dollar sentiment, and at the moment, that sentiment is negative.
AUDUSD surged from 0.7406 to 0.7479, and that move contributed to the USDCAD sell-off. AUDUSD is benefitting from bullish technicals and expectations that for a global economic boom in 2021.
GBPUSD rallied back to 1.3488 after closing at 1.3357 yesterday. Policymakers are putting a positive spin on Brexit negotiations with many sounding positive that a deal will be reached. There are reports that the UK is willing to make concessions over-fishing.
German Chancellor Angela Merkel noted that the main stumbling block is regulatory. The EU wants Britain to maintain regulations around worker rights, taxation, environmental protection, and state aid. Britain is adamant that those regulations are the main reasons why they opted to leave the EU in the first place. European Commission President Ursula von der Leyden and UK prime Minister Boris Johnson will have a face to face meeting today.
EURUSD rallied in Asia, peaked in Europe, then erased the move in its entirety, in early Toronto trading. EURUSD demand from broad risk-on sentiment is being offset by concerns about the impact of existing coronavirus measures on the Eurozone economy. Traders are also a tad cautious ahead of Thursday’s EU leaders meeting.
The Canadian dollar is also benefitting from steady to firm oil prices, although that support may not last. The American Petroleum Institute said that weekly crude inventories rose 1.1 million barrels last week, after rising 4.1 million barrels the week before.
FX volumes are starting to dwindle ahead of the seasonal holidays and year-end. There are not any US or Canadian economic reports of note today.
Today’s Suggested Range USD/CAD: 1.2740 – 1.2840