USD/CAD - Canadian Dollar Consolidating Losses

Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank’s rates – click here to compare bank rates

The Canadian dollar is poised to end the week on a negative note. U.S. political drama, and a surge in positive COVID-19 tests in Canada, the U.K., and parts of Europe, gave rise to safe-haven demand for U.S. dollars. USD/CAD traded in a $1.3201-$1.3236 range overnight, after starting the week at $1.3100 and peaking at $1.3258 yesterday. The move was entirely due to broad U.S. dollar demand.

FX traders are watching U.S. election news carefully. President Trump is behind challenger Joe Biden in almost every poll. Despite that, markets are skeptical due to the inaccuracy of the polls in the 2016 election. Hillary Clinton was a "sure-thing" before she became a footnote in history.

The concern is another global economic slump if the current wave of COVID-19 cases becomes a new pandemic. Europe and the U.K. are reporting a surge in coronavirus cases. Canada is not immune. There are 191,730 cases in the country, with 2,345 positive tests reported yesterday. The U.S. reported over 60,000 new cases yesterday.

Coronavirus aside, European and U.K. traders are extremely nervous around the Brexit negotiations. Prime Minister Boris Johnson threatened to scrap the talks if a deal wasn't reached by Thursday, but then he extended the deadline until today. Traders expect the deadline will be extended again. Johnson may not agree. He told reporters that it looked like the U.K. was heading for "the Australian solution," and said "What we're saying to them is come here, come to us, if there's some fundamental change of approach."

FX markets were steady, and rangebound overnight. EUR/USD consolidated recent losses in a $1.1695-$1.1739 range, and prices are in the middle of that band in Toronto trading. GBP/USD is trading similarly, after trading in an overnight range of $1.2860-$1.2960.

AUD/USD and NZD/USD are trading above their worst levels for the week.

Sentiment for both currency pairs is bearish due to Reserve Bank of Australia and Reserve Bank of New Zealand officials talking about negative interest rates, and expanded quantitative easing plans.

U.S. Retail sales are expected to have risen 0.7% y/y in September.

Canada August Manufacturing Sales data is forecast to fall 1.4% m/m


Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank’s rates – click here to compare bank rates