Canadian Dollar Update, November 10, 2020 – Canadian Dollar Rally Deflates
USD/CAD Open: 1.3039-43, Overnight Range: 1.2984-1.3050
WTI Oil is at $41.29 and gold is at $1,875.70. US markets are mixed today.
For today, USD resistance is at 1.3030. Support is at 1.2981.
• Yesterday’s COVID-19 vaccine euphoria fades
• UK House of Lords rejects parts of Internal Markets Bill
• US dollar firms against majors, except GBP
The Canadian dollar soared yesterday morning, then crashed. USDCAD dropped from Friday’s close of 1.3064 to 1.2930 just after breakfast time in Toronto. The rally was fueled by news that Democrat Joe Biden was moving into the White House.
Prices accelerated after Pfizer said they had a COVID-19 vaccine which was 90% effective in early tests.
Global equity markets, oil, and the commodity block currencies soared in a “risk-on” rally, which lasted until US election dysfunction soured the short-term outlook. The price action was a tad more subdued overnight. Senate Majority Leader Mitch McConnell is supporting President Trump’s decision not to concede the election.
GBPUSD was the star of the show overnight. GBPUSD climbed to 1.3271 from 1.3159 after the British House of Lords voted to remove a controversial section of Boris Johnson’s Internal Markets Bill. That is the section that would have allowed UK ministers to break international law.
FX traders decided that the removal of the section significantly improved the odds that the EU and UK will come to terms on a trade agreement.
EURUSD is choppy in a 1.1781-1.1842 range. Prices continue to trade with a negative bias following the failure to extend gains above resistance at 1.1920 on Monday. A Joe Biden government is expected to unleash a sizeable COVID Relief stimulus plan and coupled with a COVID-19 vaccine, implies the US economic rebound will outstrip that of the Eurozone. Weaker than expected German and Eurozone ZEW Economic Sentiment data today supported that view.
USDJPY soared yesterday and consolidated those gains overnight in a 104.83-105.48 range. The unwinding of coronavirus safe-haven trades supports prices, as does the sharp rise in US Treasury yields in recent days.
NZDUSD is grinding higher, rising from 0.6813 to 0.6838 ahead of tomorrow’s RBNZ monetary policy meeting. Prices are reacting like a dovish statement is fully priced-in, which may be an error. Policymakers have been getting markets ready for negative interest rates for the past few months, and that will not change.
There are not any meaningful US or Canadian economic releases available today.
Today’s Suggested Range USD/CAD: 1.2990 – 1.3090