Canadian Dollar Update, June 26, 2020 – Canadian Dollar ending week on sour note
USD/CAD Open: 1.3650-54, Overnight Range: 1.3628-1.3704
WTI Oil is at $38.13 and gold is at $1,757.80. US markets are lower today.
For today, USD resistance is at 1.3745. Support is at 1.3634.
• Canadian dollar is the weakest currency vs US dollar this week
• COVID-19 resurgence leads to some US States pausing reopenings
• ECB President suggests the worst is over for economic crisis
The Canadian dollar was the worst performing currency overnight and this week. The currency is trading in Toronto near the bottom of its overnight range, as a litany of woes, exert downward pressure.
Those woes include Bank of Canada Governor, Tiff Macklem, admitting that the domestic economy was shrouded in a fog of uncertainty. He thinks the economy will recover in the third quarter, but there said, there are plenty of risks to the view given the unknowns around the pandemic.
The Canadian dollar took another knock when Fitch Ratings Inc stripped Canada of the prestigious AAA long term debt rating. They downgraded it to AA+ Stable outlook, due to government deficits.
A drop in oil prices from their peak level is another negative, as oil traders are concerned about a resurgence of the coronavirus would curtail demand. This week, the International Monetary Fund (IMF) downgraded their global growth outlook. That news sent a ripple of risk aversion sentiment through FX markets and underpinned the US dollar strength vs the majors. The Canadian dollar was collateral damage.
The FX trading week is closing on a relatively quiet note, compared to earlier in the week. Monday early in the Asia session, President Trump Advisor Peter Navarro, told FOX News that the US/China Free Trade Agreement was over. The US dollar spiked, and equities tanked. Shortly afterwards, President Trump denied Navarro’s claim and order was restored.
This week, the Nasdaq made a second consecutive record close despite lingering second-wave COVID-19 outbreak fears. However, when the US reported a surge in new US coronavirus cases, which took numbers back to peak outbreak levels, the stock market sank.
Yesterday’s major economic data releases came and went without fanfare, as they were overshadowed by COVID-19 concerns.
The upcoming week is going to be lively thanks to portfolio rebalancing flows and a rare, Thursday US nonfarm payrolls report release. June 30 is not just a month-end, but a quarter-end and half-year end as well. Quarterly rebalancing flows may lead to US dollar selling.
Today’s US economic data consists of PCE and Michigan Consumer Sentiment. Once again, the data will play second fiddle to Wall Street moves and COVID-19 headlines.
Today’s Suggested Range USD/CAD: 1.3620 – 1.3720