Canadian Dollar Update, November 2, 2020 – Canadian Dollar Dips Then Soars
USD/CAD Open: 1.3302-06, Overnight Range: 1.3244-1.3370
WTI Oil is at $36.65 and gold is at $1,894.10. US markets are mixed today.
For today, USD resistance is at 1.3272. Support is at 1.3231.
• UK joins Eurozone with coronavirus lockdowns
• Global equity markets rally
• US dollar sinks in a mild risk seeking environment
The Canadian dollar plunged during the Asia session. News that the UK imposed fresh lockdowns across the country, along with previously announced measures across a large swath of the European Union, sparked a stampede into safe-haven currencies.
Crude oil prices were battered. West Texas Intermediate (WTI) plunged from Friday’s close of $35.73 to $33.67, on fears of sharply slowing global demand. Prices rebounded in Europe, rallying to $35.10.
The Canadian dollar price action mirrored that of WTI prices.
USDCAD jumped from 1.3319 at Friday’s close to 1.3369 in Asia, before dropping to 1.3289 in Toronto trading. Better than expected Chinese Caixin Manufacturing PMI data may have alleviated some fears about a global slowdown, as that economy has recovered from the COVID-19 outbreak.
However, China belligerence is a cause for concern.
China is using its import clout to punish Australia, over perceived slights, particularly, Australia’s demand for an independent inquiry into China’s handling of the pandemic. China banned imports of Queensland timber, barely and lobster, and is reportedly contemplating bans on copper and sugar.
The US election has overshadowed the China/Australia issue. The Wall Street Journal claims that Biden has a 10 point lead in a national poll, with Biden at 52% and Trump at 42%. The lead is not so pronounced in the battleground states. The vote is Tuesday, and it wouldn’t be a surprise to see both candidates declare victory.
EURUSD traded quietly in a 1.1623-1.1655 range. Traders ignored better than expected Euro-area Manufacturing PMI data, as it is useless in light of the latest lockdown measures. EURUSD gains are also capped by expectations for a very dovish December ECB meeting, and bearish technicals while prices are below 1.1720.
Manufacturing PMI data was not a factor for GBPUSD traders, either.
GBPUSD traded noisily in a 1.2855-1.2951 range, with prices plunging in Asia due to Prime Minister Boris Johnson imposing new lockdown measures. Thursday’s Bank of England meeting is weighing on prices as they are widely expected to announce new monetary stimulus measures.
However, reports that the EU and UK trade negotiators are close to a compromise on the fishing-rights issue, underpinned GBPUSD as it raised hopes for a Brexit deal.
US ISM Manufacturing PMI is expected to rise to 55.8 from 55.4 in September. However, FX traders will be content to await the election results.
Today’s Suggested Range USD/CAD: 1.3250 – 1.3350