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Canadian Dollar Update, July 3, 2020 – Canadian Dollar stagnating

USD/CAD Open: 1.3574-78, Overnight Range: 1.3553-1.3581

WTI Oil is at $40.23 and gold is at $1,786.90. US markets are higher.

For today, USD resistance is at 1.3603. Support is at 1.3544.

• US records another record daily increase in new coronavirus cases
• Quiet trading day ahead as America celebrates July 4th
• US dollar opens close to where it closed on Thursday

The US dollar is relatively unscathed following the drama around yesterday’s employment report. Nonfarm payrolls rose an impressive 8.4 million in June, far exceeding the consensus forecast of a 3 million increase. In normal times, such an out-sized result would have sparked a huge US dollar rally on the basis that the US economy was vastly outperforming its G-10 peers. But these are not normal times.

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The US dollar did rally, but the gains were not impressive. The weekly jobless claims data, released at the same time, paints a different employment picture. Initial jobless claims were higher than forecast, but even worse, continuing jobless claims climbed to 19.29 million. Economists suggest that the weekly data points to a much weaker NFP result in July. The sharp rise in US COVID-19 cases in the US, and the shuttering of recently re-opened businesses in some states, support that view.

The US recorded 55,200 new COVID-19 cases on Thursday, according to the Washington Post.

Florida made a new single-day record with 10,109 new cases. The resurgence prompted some governors to mandate the wearing of masks in public, while others announced curfews. President Trump believes the increase in coronavirus cases is due to increased testing.

FX traders aren’t so sure. They sold US dollars this week.

The New Zealand dollar led the commodity bloc currencies and the British pound higher since Monday’s open. The Japanese yen, Euro and Swiss franc are lower, in part due to the unwinding of safe-haven trades.

The Canadian dollar gained 0.60% since Monday, but not because of any domestic factors. The currency rode the coat-tails of improved risk sentiment, stemming from a more positive outlook for global economic growth.

UK and EU trade talks are depressing GBPUSD. The latest round of talks ended abruptly yesterday. The EU complained the UK did not understand the Eurozone position, while the UK said the EU must recognized British sovereignty.

FX price action will be limited today because US markets are closed.

Today’s Suggested Range USD/CAD: 1.3520 – 1.3620

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By KBFX | July 3, 2020 | Daily Update | 0 comments