Canadian Dollar Update, November 18, 2020 – Canadian Dollar Trading Sideways
USD/CAD Open: 1.3061-65, Overnight Range: 1.3040-1.3117
WTI Oil is at $41.95 and gold is at $1,880.00. US markets are higher today.
For today, USD resistance is at 1.3097. Support is at 1.3010.
• Canada October CPI ahead-forecast 0.2% m/m
• Eurozone and UK data have limited impact on FX
• US opens lower compared to Tuesday close
The Canadian dollar traded higher overnight, lifted by AUDUSD and NZDUSD gains. The antipodean currencies rallied on improved global risk sentiment. The Chinese yuan continued to trade higher, and that development raised expectations for a trade fueled, global economic rebound, on the heels of a successful COVID-19 vaccine.
There is a danger that markets may be getting too far ahead of themselves. A coronavirus vaccine won’t be readily available to sometime in the late spring, and that doesn’t necessarily mean that an effective distribution mechanism will be in place. More immediately, new COVID-19 cases continue to rise or remain stubbornly high in Ontario, Quebec, Manitoba, as well as in the UK, Europe, and the US. The impact of measure to contain the virus will negatively effect short-term economic growth, and it is hard to see the current “risk-rally” lasting.
The British pound continues to grind higher on anticipation that the EU and UK will come to terms on a Brexit deal. The UK telegram reported that France was ready to make concessions on fishing rights, which could pave the way to an agreement. However, other reports argue that Prime Minister Johnson and EU officials remain far apart on critical issues. GBPUSD drifted higher, rising from 1.3245 to 1.3296, with UK PPI and CPI data being a non-factor for traders.
EURUSD traded sideways in a 1.1851-1.1890 band. Traders are torn between buying Euros on hopes for a robust global economic rebound and selling euros because of EU politics and Brexit. Hungary and Poland vetoed the latest 2021-2027 budget proposal and ongoing Brexit discussions are concerns.
Overnight Asia equity indexes closed with small gains except in Japan where the Nikkei 225 shed 1.10%. European equity indexes are modestly higher as are US equity futures.
Canadian dollar direction continues to be driven by US dollar sentiment.
That will not change today, even though Statistics Canada releases October inflation data. CPI is forecast to rise by 0.2%. West Texas Intermediate (WTI climbed to $42.43 from $41.10, which contributed to positive Canadian dollar sentiment.
Today’s US economic data is second tier. October Building Permits and Housing Starts are on tap.
Today’s Suggested Range USD/CAD: 1.3020 – 1.3120