Canadian Dollar Update, November 19, 2020 – Canadian Dollar Pressured by Poor Risk Sentiment
USD/CAD Open: 1.3112-16, Overnight Range: 1.3069-1.3123
WTI Oil is at $41.61 and gold is at $1,861.40. US markets are mixed today.
For today, USD resistance is at 1.3130. Support is at 1.3042.
• Rising COVID-19 cases spook markets
• US weekly jobless claims on tap
• US dollar grinds higher overnight
The Canadian dollar has been shuffling between 1.3030 and 1.3170 since last Friday, and it traded well-within that range overnight. As usual, price action was driven by ebbing and flowing US dollar sentiment, which was mostly positive, thanks to safe-haven demand.
The US recorded over 166,000 new COVID-19 cases yesterday and the death toll from the virus topped 250,000. New York City announced the closure of public schools and numerous states are enacting restrictions to combat the latest outbreak. Traders are more focused on the current threat from the virus rather than a vaccine which is still months down the road. That shift in focus sparked a wave of “risk-off” trades in Asia and Europe.
The coronavirus is just one concern. The unresolved US presidential election is leaving uncertainty in its wake.
The overnight price action may be a sign of things to come as next week starts the US Thanksgiving holiday season, as FX volumes are likely to be reduced.
European traders had additional concerns, specifically, the EU meeting. EURUSD is on the defensive in part because Hungary and Poland blocked the 2021-2027 budget proposal, and as Brexit comes down to the crunch.
ECB President Christine Lagarde gave more hints that the December 10 ECB monetary policy meeting will usher in a new era of even more aggressive stimulus than what already exists.
EURUSD is trading in Toronto in the middle of its 1.1817-1.1857 range.
GBPUSD has managed to hang on to most of this week’s gains, even though it is well below its 1.3306 peak, with traders appearing to be expecting positive news on the Brexit front. EU Chief Negotiator Michel Barnier will give a progress report to the EU membership on Friday. Other reports say the EU will not have enough time to ratify a trade deal if it doesn’t occur by early next week.
However, as has been seen in the past, deadlines are fluid.
AUDUSD sank due to risk aversion sentiment, despite posting robust employment gains. Australia added 178,800 new jobs in October and the unemployment rate dropped to 7.2%.
Today’s US economic reports include US Jobless Claims, Philadelphia Fed Manufacturing, and existing housing sales data.
Today’s Suggested Range USD/CAD: 1.3060 – 1.3160