USD/CAD - Canadian Dollar Trading Sideways

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The Canadian dollar began to rally around mid-morning yesterday, and it continued to gain during the Asia session. USD/CAD closed at $1.3166 and dropped to $1.31339 in Asia before prices rebounded to open unchanged in Toronto.

Canada July Retail Sales are expected to rise 1.0% compared to the 0.7% increase in June. However, there is a risk of a large upside surprise, as the relaxed coronavirus lockdown measures may have unleashed pent-up demand. If so, the Canadian dollar may see modest gains, but they are unlikely to be sustained unless the US dollar continues to slide against the major G-10 currencies.

The New Zealand dollar, and the Japanese yen tied for the title of best-performing currency overnight. Both currencies gained 0.41%.

NZD/USD rose to $0.6796 from $0.6748 following comments by the Finance Minister predicting robust growth in the third quarter.
The comments helped alleviate some concerns about another rate cut.

The Japanese yen climbed on the back of bearish USD/JPY technicals alongside half-year end and safe-haven demand. USD/JPY dropped from 106.14 in Asia Monday to a low of 104.28 today.

EUR/USD rallied after finding a bottom at $1.1737 in Asia on Thursday and closed at 1.1848. Prices climbed to 1.1868 in Europe before renewed coronavirus concerns knocked them back to $1.1840 in Toronto trading. The World Health Organization (WHO) warned of an "alarming rise" in new COVID-19 case in the Euro area.

GBP/USD traded erratically inside a $1.2943-$1.2998 range. Fears about the Bank of England adopting a negative interest rate policy were overshadowed by hopes that the European Union and U.K. would come to terms on a trade deal before the December 31 deadline.

FX traders are keeping a close eye on equity markets. Stocks gained in Asia, but in Europe, they are experiencing a somewhat mixed session and close to flat. Wall Street equity futures are modestly lower.

Canadian dollar support from the jump in West Texas Intermediate oil prices to $41.47 U.S./barrel after closing at $40.97/b, evaporated when WTI dropped to $40.40 in Toronto. The Canadian dollar dipped with the fall in crude.

The Michigan Consumer Sentiment Index is the only U.S. data of note today.

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