Canadian Dollar Update, November 16, 2020 – Canadian Dollar Gains with COVID-19 Vaccine Hopes
USD/CAD Open: 1.3117-21, Overnight Range: 1.3065-1.3135
WTI Oil is at $41.16 and gold is at $1,887.30. US markets are higher today.
For today, USD resistance is at 1.3110. Support is at 1.3056.
• Mild “risk on” sentiment for markets
• COVID-19 vaccine news lifts equities
• US dollar opens on the defensive
The Canadian dollar got a bit of a boost in early Toronto trading, thanks to coronavirus vaccine news. Moderna reported, “This first interim analysis was based on 95 cases, of which 90 cases of COVID-19 were observed in the placebo group versus 5 cases observed in the mRNA-1273 group, resulting in a point estimate of vaccine efficacy of 94.5.”
Equity indexes and US equity futures rose on the news, while the US dollar lost ground due to expectations for a rebound in global growth.
The hope of a soon-to-be-available coronavirus vaccine is boosting global risk sentiment. Nevertheless, the rapidly rising numbers of new coronavirus cases in the US and elsewhere may temper enthusiasm. UK Prime Minister is self-isolating again after meeting with an infected diplomat. Large parts of Europe and the UK are under strict lockdown measures, which will hurt growth.
The Canadian dollar is trading at its session peak, despite reports that the Ontario government would impose harsh lockdown measures as early as this week.
Elsewhere, Asia markets stocks rallied on the news that the 15 Asian countries, including China, South Korea, Australia, and New Zealand, signed the Regional Comprehensive Economic Partnership (RCEP), creating the largest trading bloc in the world. The deal is expected to help spur the post-COVID-19 economic recovery in Asia.
Japan’s Q3 GDP data helped support the recovery view. GDP grew 5% y/y, which was faster than expected. However, the government downplayed the results, noting that “the Japanese economy was still in a severe situation due to COVID-19.”
AUDUSD and NZDUSD rallied on the RCEP, and Japan GDP news. AUDUSD got an added lift from comments by RBA Governor Philip Lowe who said the country was on the road to economic recovery.
EURUSD rallied in Asia and retreated in Europe and in early NY trading. Traders are cautious as Hungary is threatening to veto the EU 2021 budget. EURUSD technicals suggest further weakness while prices are below 1.1880.
GBPUSD peaked in Asia at 1.32241 then dropped to 1.3167 in early Toronto trading due to Brexit concerns.
There are not any Canadian or US economic reports on tap today.
Today’s Suggested Range USD/CAD: 1.3070 – 1.3170