Canadian Dollar Update, November 5, 2020 – Canadian Dollar Making a Move
USD/CAD Open: 1.3118-22, Overnight Range: 1.3037-1.3043
WTI Oil is at $38.46 and gold is at $1,950.70. US markets are higher today.
For today, USD resistance is at 1.3071. Support is at 1.3019.
• Canadian dollar drives higher in early Toronto trading
• US election is still undecided
• Global “risk-on” rally sinks US dollar
Canadian dollar gains lagged those of the G-10 majors overnight, but the currency is trying to make up lost ground in early Toronto trading.
USDCAD traded with a negative bias in a 1.3105-1.3176 range overnight. Prices resumed their decline in Toronto trading, dropping to 1.3057, fueled by fierce US dollar selling against the G-10 majors. The Canadian dollar rally Is not a domestic story, but a US election tale.
The Presidential election remains undecided. Neither Joe Biden nor President Trump has declared victory, but both men indicated that they believed they won. The Trump team is challenging results in Pennsylvania, Michigan, Wisconsin, and Georgia.
The Federal Open Market Committee (FOMC) meeting is today. It is likely going to be a non-event. Fed Chair Jerome Powell and his colleagues are on record saying interest rates will be unchanged for a long time, which eliminates any urgency from today’s meeting.
The Bank of England monetary policy meeting is an “event.” The BoE increased their quantitative easing program, which they broadly hinted at doing in pre-meeting speeches, and comments to the press. Yet, they surprised themselves. They increased the QE program by £150 billion, surpassing their “hinted at” target of 100 billion.
GBPUSD traders shrugged of that news, along with weaker than expected Construction PMI data and bought GBPUSD from 1.2935 to 1.3095 in Toronto.
The gains are on the back of sharply improved global risk sentiment and hopes for an EU/UK trade deal.
Global markets appear to be sick of news of people getting sick.
The US reported a record 104,004 new Coronavirus cases yesterday, and it didn’t even cause a ripple in global risk sentiment. COVID-19 fatigue, perhaps.
EURUSD rallied hard, rising from its Asia low of 1.1711 to 1.1846 in Toronto. The increased odds that Joe Biden wins the election led to widespread gains in global equity markets and gave the so-called risk-assets a boost. Prices got an added lift when the short term EURUSD technicals turned bullish after breaking above 1.1770. A decisive break above 1.1880 targets 1.2000.
The only US data of note is the weekly jobless claims report. It will be overshadowed by election news. The Canadian economic calendar is empty.
Today’s Suggested Range USD/CAD: 1.3000 – 1.3100