Canadian Dollar Update, October 6, 2020 – Canadian Dollar rangebound
USD/CAD Open: 1.3266-70, Overnight Range: 1.3242-1.3273
WTI Oil is at $40.77 and gold is at $1,921.40. US markets are mixed today.
For today, USD resistance is at 1.3281. Support is at 1.3247.
• Fed Chair Jerome Powell delivers Economic Outlook today
• ECB President leaves rate cuts on the table
• Trump returns to White House
Asia equity markets rallied on the news that President Trump was out of the hospital and back to work at the White House. Asia equity indexes closed with small gains while European equity indices have been flitting between positive and negative all morning. Wall Street futures are flat, and the major G-10 currencies were a mixed bag at the Toronto open. The Japanese yen was the biggest gainer while the Australian dollar was the biggest loser.
Fed Chair Jerome Powell delivers an Economic Outlook today. It is unlikely to be of much interest to markets as he will likely repeat his comments from the September 16 FOMC meeting. The proximity of the US election means the Fed is unlikely to say anything that could be construed as favouring one party or the other.
EURUSD traded narrowly in a 1.1766-1.1799 range. German September Factory orders data (actual 56.8 vs forecast 54) was better than expected. In addition, the August results were revised upwards, which supported prices. European Central Bank President Christine Lagarde left the door ajar to additional stimulus. She told the Wall Street Journal that Europe’s economic recovery was looking “a little bit shaky.” She hinted that and extension of the Pandemic Emergency Purchase Policy (PEPP), and interest rate cuts were being considered as a way to spur renewed economic gains.
GBPUSD climbed steadily, rising to 1.3005 from 1.2917. Prices continued to be underpinned by the joint statement from UK Prime Minister Boris Johnson and European Union Commission President Ursula von der Leyden. The leaders said that the EU/UK trade negotiations would continue for another month, sparking hopes for an agreement. Analysts from Goldman Sachs thought the news was so promising that they suggested clients buy GBPUSD.
AUDUSD was in the spotlight in Asia. The Reserve Bank of Australia monetary policy meeting statement, and the federal government budget were released. The RBA left interest rates and policy unchanged, as expected. The central bank needed time to assess the budget to see how it would impact the economy. The Finance minister predicted a budget deficit of $217.7 million, which was a tad better than predicted. The tax cuts and spending plans were also as expected. AUDUSD dropped from 0.7207 to 0.7146 on the news.
Canada and US Trade data are due this morning. They shouldn’t have any impact on FX trading.
Today’s Suggested Range USD/CAD: 1.3220 – 1.3320