Canadian Dollar Update, October 28, 2020 – Canadian Dollar Drops
USD/CAD Open: 1.3241-45, Overnight Range: 1.3176-1.3333
WTI Oil is at $37.20 and gold is at $1,881.40. US markets are lower today.
For today, USD resistance is at 1.3344. Support is at 1.3280.
• Second-wave COVID-19 pandemic fears spark US dollar demand
• Lack of US stimulus package sinks Wall Street
• Bank of Canada policy meeting may be non-event
The Canadian dollar opened sharply lower compared to yesterday’s close.
The move was triggered by a wave of safe-haven demand for US dollars as soaring COVID-19 cases in the US, Europe, and the UK raise fears that authorities will impose lockdown measures.
President Emmanuel Macron of France will address his nation today as the government is considering a twenty-eight day lockdown for the entire country. German authorities are contemplating a two-week shutdown to help stop the spread of coronavirus. Italy has already imposed strict measures. Things are just as bad in the US, with over 73,000 coronavirus cases reported yesterday.
FX traders were also disappointed at the US administration’s failure to enact another COVID-19 Relief bill which now appears stalled until January.
EURUSD extended its losses from yesterday and fell to 1.1732 from 1.1794 at yesterday’s close. The wave of risk-off demand for dollars combined with uncertainty around Thursday’s European Central Bank (ECB) meeting weighed on prices. Some analysts fear that the latest bout of coronavirus lockdowns may force the already dovish ECB to accelerate their stimulus plans, as early as tomorrow. However, despite the recent weakness, the EURUSD technicals are bullish while prices are above 1.1670.
GBPUSD plunged to 1.2953 from 1.3047 as safe-haven demand for US dollars exacerbated selling pressure because of rising UK coronavirus cases, and the lack of progress in the Brexit negotiations. European President Charles Michel suggested that the EU was unsure if a UK deal was still possible, while France did not show any willingness to compromise on fishing rights.
AUDUSD and NZDUSD managed to squeeze out gains during the Asia session, sparked by better than expected Australian inflation data. Those gains were erased during the European session, with both currency pairs posting losses at the Toronto open.
Oil prices slumped after the American Petroleum Institute reported that US crude inventories rose 4.5 million barrels in the week ending October 23.
USDCAD rallied on the back of broad US dollar strength with lower oil prices contributing to the gains. Today’s Bank of Canada meeting will have little to no impact on FX markets.
The BoC is expected to leave rates, policy, and guidance unchanged, while warning of downside risks due to the coronavirus.
There are not any US economic reports of note today.
Today’s Suggested Range USD/CAD: 1.3250 – 1.3350