Canadian Dollar Update, October 8, 2020 – Canadian Dollar probing resistance
USD/CAD Open: 1.3234-38, Overnight Range: 1.3219-1.3265
WTI Oil is at $40.75 and gold is at $1,893.80. US markets are higher today.
For today, USD resistance is at 1.3275. Support is at 1.3179.
• FX risk sentiment improves on new US stimulus hopes
• No new insight from FOMC minutes
• Bank of Canada Governor Tiff Macklem on tap
The Canadian dollar extended yesterday’s gains overnight.
USDCAD dropped from 1.3264 to 1.3231, due to a modest improvement in global FX risk sentiment. US Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin are reportedly having discussions today about implementing a narrowly focused COVID-19 Relief plan. President Trump got the ball rolling Tuesday when he tweeted his support for a Stand Alone Bill for Stimulus Cheques.
Wall Street endorsed the developments by powering the Dow Jones Industrial Average to a 1.9% gain. Asia equity markets followed suit, although China’s markets were still closed for Golden Week holidays. The equity rally continued in Europe. The major indices are higher but off their best levels. US equity futures suggest a positive open on Wall Street.
The FOMC minutes were not enlightening. The Committee is far from unified in its outlook for economic growth and inflation and spent a lot of time debating how they would communicate the message to markets.
The focus shifted to Vice President debate. Incumbent Mike Pence squared off with Kamala Harris, in a more civilized manner than the earlier Trump/Biden debate. Even so, it was a non-event for markets.
In Europe, renewed coronavirus fears, Brexit, and dovish comments from ECB officials trapped EURUSD in a narrow 1.1753-1.1781 range. Luis de Guindos, ECB VP reinforced the bank’s dovish bias saying: “Inflation expectations are very subdued as a result of the pandemic and some specific factors and we have to act with the tools available to us.”
GBPUSD rallied to 1.2969 then hit a wall on Brexit gamesmanship. EU Chief Negotiator Michel Barnier hinted that he thought the UK’s threat to leave was a bluff when he said he didn’t expect them to walk. Prime Minister Boris Johnson took umbrage at the comment and retorted that the UK would definitely walk if a satisfactory deal was not reached.
GBPUSD dropped to 1.2905 in Toronto trading.
The possibility of a limited COVID-19 stimulus plan in the US propelled AUD, NZD, and CAD higher against the US dollar. AUDUSD was the best performing currency overnight, although its gains were marginal.
Bank of Canada Governor Tiff Macklem’s speech is titled “The Global Risk Institute and the evolution of risks during a pandemic.” It is not likely to have much impact on the Canadian dollar as currency direction is dictated by US dollar sentiment.
US weekly jobless claims data today is forecast at 830,000. Better than expected results may improve the positive risk sentiment tone.
Today’s Suggested Range USD/CAD: 1.3190 – 1.3290