The Canadian dollar sank along with the antipodean currencies overnight. The move was precipitated by the failure of U.S. politicians to come to terms for a new COVID-19 Relief package. Also, there was a healthy dose of pre-weekend profit-taking thrown into the mix, as the greenback had given up a lot of ground this week.
The U.S. reported 252,431 new coronavirus cases yesterday. Many European countries and the UK have tightened coronavirus restrictions.
That kind of news should have sparked renewed safe-haven demand. It didn’t. Instead, markets are focused on coronavirus vaccines, smug in the knowledge that if they become ill, treatment is available. It helped that Moderna’s vaccine is expected to get approval from the U.S. Food and Drug Administration today.
The European Union and United Kingdom trade talks have tangled their lines over fishing access. EU Chief Trade Negotiator Michel Barnier explained the issue. He said if the U.K. would like to regain its sovereignty over fisheries, to be able to control access to its waters, then cut access to these waters for European fishermen, "then the European Union also has to maintain its sovereign right to react or to compensate by adjusting the conditions for products, and especially fisheries products to the single market." Essentially, if EU fishermen can fish in British waters, British fishery products are subject to EU import tariffs.
GBP/USD dropped from a peak of $1.3620 yesterday to $1.3490 in early Toronto trading. Prices have since rebounded to $1.3545. Arguably, GBP/USD will fall further in the event of a "no-deal" then it will rise if there is an agreement.
EUR/USD retreated from its overnight peak of $1.2270 and dropped to $1.2240 before prices recovered to $1.2268 in Toronto. The German IFO Survey surprised to the upside with the three key measures, Business Climate, Expectations, and Current Conditions beating forecasts.
The news had little impact on trading as the focus in on Brexit.
USDJPY climbed to 103.59 from 103.12 on broad-U.S. dollar demand. The Bank of Japan left interest rates and monetary policy unchanged. Governor Kuroda said that they were "closely watching" the currency but added the level of the JPY was not having a serious impact on the economy.
There are no U.S. economic reports on tap today. Canada data includes Retail Sales.
