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Canadian Dollar Update, May 11, 2020 – Canadian Dollar tracking Greenback moves

USD/CAD Open: 1.3976-80, Overnight Range: 1.3900-1.4014

WTI Oil is at $25.22 and gold is at $1,701.00. US markets are mixed today.

For today, USD resistance is at 1.4036. Support is at 1.3952.

• Canadian dollar unphased by Friday’s Canadian Employment Report
• Oil price consolidation gives Canadian dollar a bit of support
• FX markets shifted from risk-on in Asia to risk-off in Europe

The Canadian dollar traded in a choppy fashion overnight. Asia opened in a good mood. Risk sentiment was positive after US stocks finished on Friday with strong gains, led by a nearly 2.0% increase in the Dow Jones Industrial Average (DJIA). Traders were encouraged by reports that the number of COVID-19 cases being reported was in decline. New Zealand Prime Minister, Jacinda Ardern, said she would phase out the coronavirus lockdown by May 21.

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Traders are also cautious ahead of the Reserve Bank of New Zealand policy meeting due Wednesday.

The plunge in the antipodean currency pairs skewered the Canadian dollar. USDCAD dropped to 1.3902 at the Asia open, despite Statistics Canada reporting record job losses on Friday. Canada lost 2 million jobs, and initially, the report was viewed as good news. The forecast was for a loss of 4.0 million.

Those jobs are not going to magically reappear next month or even the month after that. The fall-out from the lockdown measures taken to combat the pandemic will reverberate for more time to come. Businesses did not just close temporarily; many folded, unable to withstand the cash losses. The government has limited resources, and the impact on the oil industry will greatly reduce one of Canada’s sources of income. It could mean higher taxes, and international investors won’t be lining up to invest in a high tax jurisdiction.

The US dollar is trading with a firm bias in Toronto, managing to record gains against the major G-10 currencies since Friday’s close. There are not any economic data releases from Canada or the US today, which leaves equity markets to provide direction. S&P futures are down, which suggests a negative open on Wall Street, and by default, ongoing negative risk sentiment.

Today’s Suggested Range USD/CAD: 1.3930– 1.4030

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By KBFX | May 11, 2020 | Daily Update | 0 comments