Canadian Dollar Update, October 27, 2020 – Canadian Dollar Directionless
USD/CAD Open: 1.3191-95, Overnight Range: 1.3150-1.3212
WTI Oil is at $39.48 and gold is at $1,910.50. US markets are mixed today.
For today, USD resistance is at 1.3193. Support is at 1.3126.
• Canadian dollar inches higher in quiet overnight trading
• Caution ahead of US election limits FX activity
• US Durable Goods data due today
The Canadian dollar is opening a tad higher than where it closed, following in the footsteps of the Australian and New Zealand dollars. The price action is merely noise in the context of well-defined trading ranges.
Traders are very leery ahead of Tuesday’s US election. Democrat Joe Biden is leading in the polls, which suggests Donald Trump will be a one-term president. However, the abject failure of polling data to predict Trump’s 2016 victory is tempering enthusiasm for these polls. But not completely. Many pundits are attributing the latest weakness in US equity markets to the belief Mr. Biden’s bid for the presidency is successful.
The latest coronavirus outbreaks in the US, Europe, UK, and Canada, inspired a mild note of risk-aversion sentiment, but nothing like what occurred last April. It seems that markets believe that a COVID-19 vaccine is on the way, and as long as they don’t get the virus, the world will be okay.
Traders are still expecting US politicians to announce a new COVID-19 Relief bill, although the timing of an announcement is up in the air.
EURUSD traded choppily, rising from 1.1804 to 1.1835 in Asia, then dropping to 1.1795 in Europe. Prices rebounded to 1.1820 in Toronto trading. Dovish expectations from Thursday’s ECB monetary policy meeting and the implementation of more aggressive coronavirus measures in France, Spain, and Italy are weighing on prices.
GBPUSD is trading at the top of its 1.3002-1.3043 range.
Traders are getting comfortable with the idea that the EU and UK will reach a trade agreement, avoiding a “no-deal” Brexit. However, the quality of such an arrangement is questionable, which is limiting gains. Also, France has yet to back down from its threat to veto any agreement if its access to UK fishing waters is reduced.
The topside is limited by concerns about the Bank of England introducing negative interest rates. Traders are hoping to get more insight from the November 5 meeting.
USDJPY traded in a tight band, underpinned by bullish technicals but gains capped by US election concerns, and rising coronavirus cases.
There is a lot of US data available today, including Durable Goods Orders, Case Shiller Home Prices, and Consumer Confidence. The results will be more important to equity traders than FX markets.
Today’s Suggested Range USD/CAD: 1.3140 – 1.3240