The Canadian dollar is opening a tad higher than where it closed, following in the footsteps of the Australian and New Zealand dollars. The price action is merely noise in the context of well-defined trading ranges.
Traders are very leery ahead of Tuesday’s U.S. election. Democrat Joe Biden is leading in the polls, which suggests Donald Trump will be a one-term president. However, the abject failure of polling data to predict Trump’s 2016 victory is tempering enthusiasm for these polls. But not completely. Many pundits are attributing the latest weakness in U.S. equity markets to the belief Biden’s bid for the presidency is successful.
The latest coronavirus outbreaks in the U.S., Europe, U.K., and Canada, inspired a mild note of risk-aversion sentiment, but nothing like what occurred last April. It seems that markets believe a COVID-19 vaccine is on the way, and as long as they don’t get the virus, the world will be okay.
Traders are still expecting U.S. politicians to announce a new COVID-19 Relief bill, although the timing of an announcement is up in the air.
EUR/USD traded choppily, rising from $1.1804 to $1.1835 in Asia, then dropping to $1.1795 in Europe. Prices rebounded to 1.1820 in Toronto trading. Dovish expectations from Thursday’s European Central Bank monetary policy meeting and the implementation of more aggressive coronavirus measures in France, Spain, and Italy are weighing on prices.
GBP/USD is trading at the top of its $1.3002-$1.3043 range.
Traders are getting comfortable with the idea that the E.U. and U.K. will reach a trade agreement, avoiding a "no-deal" Brexit. However, the quality of such an arrangement is questionable, which is limiting gains. Also, France has yet to back down from its threat to veto any agreement if its access to U.K. fishing waters is reduced.
The topside is limited by concerns about the Bank of England introducing negative interest rates. Traders are hoping to get more insight from the November 5 meeting.
USD/JPY traded in a tight band, underpinned by bullish technicals but gains capped by U.S. election concerns, and rising coronavirus cases.
There is a lot of U.S. data available today, including Durable Goods Orders, Case Shiller Home Prices, and Consumer Confidence. The results will be more important to equity traders than FX markets.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
