Canadian Dollar Update, September 11, 2020 – Canadian Dollar trading sideways
USD/CAD Open: 1.3168-72, Overnight Range: 1.3150-1.3194
WTI Oil is at $37.54 and gold is at $1,957.60. US markets are higher today.
For today, USD resistance is at 1.3215. Support is at 1.3149.
• UK Brexit woes weigh on GBPUSD
• ECB posture leaves EURUSD rangebound
• US dollar opens lower except against GBP and JPY
The Canadian dollar sank on the back of broad US dollar demand yesterday. FX markets were extremely choppy due to the EU reaction to the UK’s latest Brexit salvo, and because of the European Central Bank (ECB) monetary policy meeting.
The Australian and New Zealand dollars were the best performing major G-10 currency pairs overnight rising around 0.54% compared to the US dollar. The Canadian dollar managed to squeeze higher but only rose 0.17%. The British pound dipped, and the Japanese yen was close to unchanged.
GBPUSD collapsed on Thursday, falling from 1.3030 to 1.2780, a loss of 2.0%. It was a self-inflicted wound caused by the UK government’s unilateral decision to amend the previously agreed EU withdrawal agreement. The European Union dismissed the UK’s actions with EU lawyers claiming Britain is in breach of the deal. They gave Boris Johnson’s government three weeks to amend the Internal Market Bill. Analysts quickly raised the odds for a “no-deal” Brexit and traders sold the currency.
GBPUSD recouped some of its losses overnight and in early Toronto trading, with prices climbing from a low of 1.2764 to 1.2835. The gains were attributed to profit-taking ahead of the weekend.
EURUSD traded erratically yesterday following the European Central Bank (ECB) monetary policy meeting. The ECB was not as dovish as expected which gave EURUSD an early lift, taking prices from 1.1836 to 1.1915. ECB President Christine Lagarde said that the economic data showed a “strong rebound,” supporting gains, but sentiment shifted when she said the “balance of risks was to the downside.” The ECB also tweaked 2020 growth forecasts from an ugly -8.7% to a still ugly -8.0% y/y.
EURUSD dropped to 1.1812 after Ms. Lagarde noted that although policymakers didn’t target the exchange rate, they do monitor how the exchange rate impacts inflation. Prices climbed steadily overnight and touched 1.1873 at the Toronto open.
Asia equity markets closed on a mixed note, and European equity indexes are all higher, in contrast with yesterday’s losses on Wall Street. Gold and oil prices are close to unchanged ahead of this morning’s US inflation report.
August CPI is expected to drop to 0.3% m/m compared to July’s 0.6% result. The impact of the data will be limited ahead of next week’s FOMC meeting.
Today’s Suggested Range USD/CAD: 1.3120 – 1.3220