Canadian Dollar Update, October 13, 2020 – Canadian Dollar outperforms
USD/CAD Open: 1.3111-15, Overnight Range: 1.3099-1.3146
WTI Oil is at $40.25 and gold is at $1,894.40. US markets are mixed today.
For today, USD resistance is at 1.3173. Support is at 1.3099.
• Data, COVID news weigh on risk sentiment
• AUDUSD hit by China actions
• Eurozone data pressures EURUSD
The Canadian dollar continues to bask in the glow of Friday’s better-than-expected employment report. Canada added 334,000 jobs in September, far more than the 157,000 predicted, and the Canadian dollar rallied. However, Canada still needs to recover another 720,000 jobs to bring employment back to pre-pandemic levels, which helps explain the Canadian dollar’s tepid reaction to the data. Analysts attribute the gains to the reopening of schools.
Canadian dollar gains are being thwarted by the latest COVID-19 restrictions implemented in parts of Ontario and Quebec. Ontario closed indoor dining, gyms, casinos, and movie theaters in Toronto, Ottawa, and Peel Region. The government also recommended limiting trips outside the home. These measures are in place for 28 days which ensures that October will not see a repeat of September’s job gains.
China released better than expected trade data overnight. Exports and Imports rose, which should have been good news for the antipodean currencies. It wasn’t. News that China halted thermal and metallurgical coal shipments knocked AUDUSD from 0.7210 to 0.7167 overnight. NZDUSD dropped in sympathy, but not to the same extent.
USDJPY traded quietly in a narrow 105.29-105.50 band. Reports of another coronavirus vaccine test failure weighed on prices, but hopes for a US COVID-19 relief package limited losses.
EURUSD suffered from dovish comments by ECB officials, and weak ZEW Survey results. ECB Vice President Luis de Guindos said the Eurozone economic recovery was losing momentum, which would necessitate policymakers acting accordingly. Earlier, outgoing ECB policymaker Yves Mersch said that the central bank should make debt issuance a permanent policy option. The ZEW data disappointed. German and Eurozone results were much weaker than expected, which was due to rising coronavirus cases in the region.
FX markets will continue to churn on US election news, Wall Street performance, and today’s US inflation report.
US CPI increased 0.2% in September (seasonally adjusted basis), from 0.4% in August. The increase was mainly due to a rise in the index for used cars and trucks.
Today’s Suggested Range USD/CAD: 1.3070 – 1.3170