The Canadian dollar opened in Toronto close to unchanged compared to Friday’s closing level. Prices climbed in Asia, in part because of slumping oil prices.
West Texas Intermediate, the North American benchmark price has fallen 14.5% since the beginning of the month. WTI prices are weighed down by increased Opec crude production which began August 1, high US crude inventories, and concerns about slowing Chinese demand for oil.
The U.S. dollar was on the defensive overnight as risk sentiment improved. Reports that Pfizer expects to release a coronavirus vaccine before year-end, and news that Astra Zeneca restarted Phase 3 trials, helped to lift Asia equity indexes, which closed with gains. European equities are mixed, while U.S. equity futures point to a strong open on Wall Street today.
GBP/USD continues to hog the spotlight. The U.K. parliament is engaged in the second reading of Prime Minister Boris Johnson’s Internal Markets Bill. The currency will be vulnerable to inflammatory headlines, especially considering the prevailing bearish sentiment due to the elevated risk of a "no-deal" Brexit. GBP/USD is also undermined by an increase in U.K. COVID-19 cases and the re-introduction of restrictive coronavirus measures
EUR/USD rallied, as prices continue to be supported by last week’s less-dovish-than-expected European Central Bank message. That message was reinforced over the weekend. President Christine Lagarde said that the positive impact from the ECB’s stimulus program was partially offset by gains in EUR/USD. Her remarks were supported by comments from Finland Central Bank Governor Olli Rehn. He said he was concerned about the inflation outlook. The single currency is underpinned by the improved tone to risk sentiment and EUR/USD opened in Toronto at the top of its overnight range.
USD/JPY trade with a negative bias inside a narrow 105.92-106.15 range. Yoshihide Suga is the new Japan Prime Minister. He won the leadership race to replace Shinzo Abe, who retired for health reasons.
The antipodean currencies are trading in the middle of their narrow overnight ranges, with prices tracking broad U.S. dollar moves
The European, Canadian, and U.S. economic data calendars are empty, leaving U.S. dollar direction at the whim of equity moves. Prices are unlikely to move far from current levels until after Wednesday’s Federal Open Market Committee meeting.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
