Canadian Dollar Update, October 26, 2020 – Canadian Dollar Gives Back Gains
USD/CAD Open: 1.3182-86, Overnight Range: 1.3121-1.3225
WTI Oil is at $38.52 and gold is at $1,904.80. US markets are lower today.
For today, USD resistance is at 1.3231. Support is at 1.3171.
• Another round of risk aversion ripples through FX
• German IFO data, EURGBP selling undermines EURUSD
• Canadian dollar opens as worst performing currency overnight
The Canadian dollar lost 0.44% of its value against the US dollar between Friday’s close and today’s Toronto open. The losses did not have anything to do with domestic data or politics.
Instead, the currency sank under a wave of mild safe-haven demand for US dollars.
A second wave-coronavirus outbreak has dampened risk sentiment. Spain entered a state of emergency with a nationwide curfew from 11-to 6:00 am. The US recorded 148,386 new positive tests on the weekend.
China ratcheted up the geopolitical tension meter by saying they would impose sanctions on US companies supplying war materials to Taiwan. Other geopolitical flash-points included France and Turkey, and the EU and Belarus. France recalled their ambassador to Turkey after Turkish dictator Erdogan questioned French President Macron’s mental health.
FX markets continue to be cautious ahead of a possible new US COVID-19 Relief stimulus package. US officials on both sides of the divide, continue to suggest that a deal is possible.
Traders are also counting down the days to November 3, when the US election campaign finally ends.
GBPUSD dropped in Asia and rallied in Europe and early Toronto trading. GBPUSD fell from 1.3043 at Friday’s close to 1.2994 in Asia before soaring to 1.3074.
Brexit talks are continuing, raising hopes of a trade deal, letting Britain avoid a “hard-Brexit.” German Chancellor Angela Merkel and other EU leaders are pressuring France to avoid vetoing any agreement because of fishing rights.
EURUSD sank under the weight of weak German economic data, and EURGBP selling. The German IFO Survey was weaker than expected. The Business Climate Index was 92.7 compared to 93.2 in September. German businesses were more skeptical about developments in the coming months.
Turkey is fast-becoming NATO’s problem child. Turkey is a NATO member, and it is picking a fight with Greece, also a NATO member. The EU has sided with Greece, and the Turkey/France spat exacerbated the situation. These concerns are acting as a drag to EURUSD gains.
Canadian dollar price action will continue to mirror US dollar moves against the majors. There are not any domestic economic reports available today.
Today’s Suggested Range USD/CAD: 1.3140 – 1.3240