Canadian Dollar Update, October 1, 2020 – Canadian Dollar recoups Asia losses
USD/CAD Open: 1.3287-91, Overnight Range: 1.3279-1.3322
WTI Oil is at $38.10 and gold is at $1,905.10. US markets are mixed today.
For today, USD resistance is at 1.3342. Support is at 1.3264.
• October starts with positive risk sentiment
• GBPUSD dips hard, rallies harder
• Today’s US economic data may spur risk rally
The Canadian dollar closed September with a 2.4% loss against the US dollar. The British pound was the worst-performing currency, followed by the Australian dollar. Only the Japanese yen managed a gain, and it was just 0.30%.
The US dollar rally appeared to come to a halt yesterday as month-end portfolio manager demand for US dollars abated. The commodity currency bloc surged, with the Australian dollar rising 1.1%, the New Zealand dollar gaining 0.94% and the Canadian dollar climbing 0.84%.
FX risk sentiment took a turn for the better on reports that US Republicans and Democrats were close to agreeing on a new COVID-19 stimulus package. Also, better than expected ADP employment, Chicago PMI, and Home Sales data showed the US economic recovery was continuing.
Overnight, Asia equity markets were quiet, due to Golden Week holidays in China, along with holidays in Hong Kong, Taiwan, and South Korea.
The Tokyo Stock Exchange suffered a major technical problem, and it was forced to close for the entire day. European stock markets managed to post gains, as stimulus hopes fuel the rise in US equity futures.
GBPUSD whip-sawed between Europe and early Toronto trading. Prices dropped from 1.2947 to 1.2821, after news that the European Union began legal proceeding against the UK for changing the Brexit Agreement. The EU is accusing Britain of failing to act in “good faith.” In addition, report that the Reuters reported that EU/UK trade talks have “stalled on subsidies, fisheries and ways to solve disputes.” The sell-off quickly reversed and GBPUSD soared to 1.2975.
EURUSD inched higher alongside the latest GBPUSD rally, but ongoing concerns around ECB issues with the level of the exchange rate, COVID-19 outbreaks, and weaker than expected economic data are acting as a drag on gains.
EURUSD is trading just below the top of its 1.1718-1.1768 overnight range.
The Canadian dollar continues to ignore oil price action, domestic data, and Canadian political developments. It has also de-coupled somewhat from EURUSD moves and is more correlated with the antipodean currencies, in recent days. The improved risk tone has boosted the commodity currencies.
Traders are looking ahead to today’s weekly jobless claims and ISM Manufacturing PMI data, as better than expected results would indicate the US economic recovery is continuing. There are not any Canadian economic reports of note, today.
Today’s Suggested Range USD/CAD: 1.3240 – 1.3340