Canadian Dollar Update, November 11, 2020 – Canadian Dollar Consolidating Gains
USD/CAD Open: 1.3035-39, Overnight Range: 1.3008-1.3076
WTI Oil is at $42.23 and gold is at $1,863.90. US markets are higher today.
For today, USD resistance is at 1.3109. Support is at 1.3019.
• US Politics and COVID-19 driving risk sentiment
• RBNZ less dovish than expected: NZDUSD soars
• US dollar firms and grinding out gains
The Canadian dollar continued to consolidate its November gains in relatively subdued trading overnight.
The second-wave COVID-19 outbreak is causing waves, at least for governments. The US reported 135,428 new cases on November 10, which is a 35% increase in a week. Europe and the UK have announced restrictions. Canada has not escaped the virus. New and more restrictive measures have been announced in Quebec, Ontario, and Manitoba, with other provinces planning steps as well.
Equity markets do not care. The news of upcoming COVID-19 vaccines has tempered their fears and Europe, and UK indexes are higher, as are US stock futures. FX traders appear to be a tad more cautious. The US dollar is trading firmer against all the majors in early NY trading.
FX markets will be thinner than usual as it is a partial holiday in the US and Canada, for Veteran’s Day and Remembrance Day observations.
NZDUSD was the best performing major G-10 currency overnight. The Reserve Bank of New Zealand left monetary policies unchanged and dampened expectations of a near term rate cut into negative territory. The market was short NZDUSD, expecting an aggressively dovish statement, and when it didn’t happen, they scrambled to cover positions. NZDUSD rallied to 0.6902 from 0.6811. Prices have eased in early Toronto trading.
On the other side of the Tasmanian Sea, AUDUSD scraped out gains, rising to 0.7317 from 0.7287 after Consumer Confident data rose for the third month in a row. Broad US dollar demand in Europe knocked prices lower, and AUDUSD is trading at 0.7266 in Toronto.
GBPUSD rallied on reports that UK/EU trade talks will continue beyond the November 15 deadline. The gains were not sustained, and GBPUSD is trading at session lows in Toronto.
EURUSD is under pressure. Prices have dropped from 1.1832 in Asia to 1.1755 in Toronto, in part because markets believe the US economy will outperform that of the Eurozone.
USDCAD is rising due to widespread demand for US dollars, despite rising crude oil prices. The domestic currency direction will continue to be determined by broad US dollar sentiment, and not domestic developments.
There are not any economic reports due today.
Today’s Suggested Range USD/CAD: 1.2990 – 1.3090