Canadian Dollar Update, November 23, 2020 – Canadian Dollar Grinding Higher
USD/CAD Open: 1.3048-52, Overnight Range: 1.3045-1.3112
WTI Oil is at $43.05 and gold is at $1,835.30. US markets are higher today.
For today, USD resistance is at 1.3101. Support is at 1.3074.
• Higher oil prices support Canadian dollar
• Risk sentiment improves with new vaccine data
• GBPUSD climbs on Brexit deal hopes
The Canadian dollar climbed overnight and is now bumping up against resistance. USDCAD dropped from 1.3093 to 1.3048 on the back of a surge in positive risk sentiment stemming from coronavirus vaccine news. AstraZeneca and Oxford University said their vaccine was about 90% effective and could be ready to use before the end of the year. This news follows on the heels of similar successes announced by Moderna Inc and Pfizer Inc, last week.
The Canadian dollar also got a bit of a commodity currency bloc bump.
The Australian and New Zealand dollars rallied following better than expected economic data. New Zealand said Q3 Retail Sales rose 28% q/q, easily beating the 20% gain predicted. NZDUSD climbed to 0.6964 from 0.6918. AUDUSD was underpinned by forecast-beating Manufacturing and Services PMI data, which helped lift prices from 0.7302 to 0.7336.
In contrast, Friday’s Canadian Retail Sales report lacked the drama of New Zealand’s. Canada September Retail Sales rose 1.1% in September, well above the 0.2% forecast. The Canadian dollar did not benefit from the news and closed at 1.3093 on Friday.
Oil prices have climbed 5.3% since last Thursday, and that rise has helped lift the Canadian dollar. West Texas Intermediate climbed from $41.10/barrel on November 19 to $43.31 in Toronto today. The gains are due to reports that OPEC and friends will not reduce production cuts at their November 30 meeting, and because of the improved global growth outlook.
The distribution of a COVID-19 vaccine is expected to lead to a massive surge in global growth in 2021.
The British pound is on the move. GBPUSD soared to 1.3385 from 1.3290 overnight following reports that an EU and UK trade deal is 95% complete. Another report said that Prime Minister Boris Johnson would intervene in the talks to ensure a deal is done. There are rumours of an announcement in the next few days. The news overshadowed weak services and manufacturing PMI data.
EURUSD rallied on both the vaccine and Brexit news. Prices broke above 1.1900 for the first time in two weeks. Euro area PMI data was ignored.
Japan was closed for a national holiday, leaving USDJPY in a narrow 103.70-103.85 range.
The US and Canadian economic calendars are empty of any material data, leaving risk sentiment and Wall Street driving FX direction.
Today’s Suggested Range USD/CAD: 1.3000 – 1.3100