Canadian Dollar Update, November 4, 2020 – Canadian Dollar Trading is Messy
USD/CAD Open: 1.3208-12, Overnight Range: 1.3095-1.3299
WTI Oil is at $39.02 and gold is at $1,893.70. US markets are mixed today.
For today, USD resistance is at 1.3143. Support is at 1.3099.
• Undecided US election roils FX markets
• Equity markets trading firmer, Wall Street futures mixed
• US dollar recovers yesterday’s losses
The Canadian dollar traded erratically in a wild, overnight FX session. USDCAD plunged to 1.3098 in Asia as it tracked broad US dollar moves. The greenback was sold aggressively on the back of early US election results, in hopes Joe Biden would lead a “Blue Wave” into the White House. Traders quickly realized that it wasn’t going to be that easy. USDCAD soared and reached 1.3298 at the European open. Prices started to decline as results showed Joe Biden with a small lead over President Trump, and USDCAD dropped to 1.3148 in early Toronto trading.
Not surprisingly, the US election was the major focus for markets overnight. Markets ignored economic data. The US election is far from decided. Once again, the polls were wrong, and wrong in a big way. Predictions of a Democratic sweep of the White House, Senate and House of Representatives, look foolish in the harsh light of the post-vote morning. The Senate race is tied with both parties winning 47 seats (as of 6:00 am ET) with six seats not yet determined. The House is still up for grabs. The Democrats had the majority before the election, but at last count, they have lost four seats. The votes are still being tabulated.
There are still several key states counting ballots, and President Trump has not conceded. Far from it. He said to supporters in the early hours today, ”Frankly, we did win this election.”
USDJPY price action was wild, especially for a currency pair that struggled to move more than 0.30 points a day for the past week. USDJPY soared to 105.34, after closing in Toronto at 104.51.
That spike coincided with a rise in US 10-year Treasury yields from 0.90% to 0.94%. However, as US election results started to hit the news wires, the 10-year yields plunged sharply, falling to 0.78%. USDJPY slid as well, dropping to 104.38, and leaving the currency pair locked in its well-defined 104.00-104.50 range.
EURUSD and GBPUSD traded in tandem. Both currency pairs tracked the US election, rising and falling as results were reported. Eurozone PMI data was ignored, while weaker than expected UK Services PMI data contributed to the GBPUSD sell-off.
The US election results will continue to be the focus for markets today.
Today’s Suggested Range USD/CAD: 1.3100 – 1.3200