Canadian Dollar Update, July 10, 2020 – Canadian Dollar consolidates yesterday’s losses
USD/CAD Open: 1.3600-04 Overnight Range: 1.3574-1.3631
WTI Oil is at $40.18 and gold is at $1,803.40. US markets are higher today.
For today, USD resistance is at 1.3622. Support is at 1.3550.
• Shift to negative risk sentiment hurts Canadian dollar
• COVID-19 cases continue to rise, sparking demand for safe-haven currencies
• Canada employment data on tap today
The Canadian dollar sank yesterday, and continued to slide overnight. USDCAD bears were thwarted when they attempted to break below support in the 1.3490-00 area on Thursday. The subsequent bounce above 1.3550, triggered stop-loss demand and gains extended overnight.
Falling crude oil prices exacerbated the Canadian dollar sell-off. West Texas Intermediate, the North American benchmark dropped from Thursday’s peak of $40.05/barrel to $38.56 during the European session. The International Energy Agency (IEA) updated forecasts today, predictions 2020 oil demand would increase by 400,000 barrels per day. They hedged their guess by saying that COVID-19 flare-ups skewed risks to the downside. WTI prices bounced in early NY trading.
Canadian dollar traders received the release of the monthly Labour Force Survey, released by Statistics Canada today. The report indicated 953,000 job gains in June as COVID-19 restrictions were eased. The unemployment rate fell to 12.3% in June from 13.7% in May. The report was better than forecasted, but still not at a pre-COVID level due to 1.8 million fewer jobs.
The high number of new COVID-19 cases in the US, a rise in new coronavirus cases in Tokyo, combined with healthy gains in stock markets, sparked a profit-taking-fueled shift into safe-haven trades yesterday and overnight. New York opened with additional US dollar gains against the commodity currencies, firmer JPY, and higher gold prices, while remaining close to flat against GBP and CHF.
Asia equity indexes closed with losses. European bourses were down during the European morning, but have turned positive in early NY trading. US futures are still modestly negative.
European markets were watching developments from the EU Council meeting. The Council proposed a €1.07 trillion budget and left the Recovery fund proposal at €750.0 billion. They also found room for a €5.0 billion reserve to help mitigate damages caused by Brexit.
US Producer Price data is due today, but it won’t be a factor for FX markets.
Today’s Suggested Range USD/CAD: 1.3550 – 1.3650