USD/CAD - Canadian Dollar Gains with COVID-19 Vaccine Hopes

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The Canadian dollar got a bit of a boost in early Toronto trading, thanks to coronavirus vaccine news. Moderna reported, "This first interim analysis was based on 95 cases, of which 90 cases of COVID-19 were observed in the placebo group versus five cases observed in the mRNA-1273 group, resulting in a point estimate of vaccine efficacy of 94.5."

Equity indexes and U.S. equity futures rose on the news, while the US dollar lost ground due to expectations for a rebound in global growth.

The hope of a soon-to-be-available coronavirus vaccine is boosting global risk sentiment. Nevertheless, the rapidly rising numbers of new coronavirus cases in the U.S. and elsewhere may temper enthusiasm. U.K. Prime Minister Boris Johnson is self-isolating again after meeting with an infected diplomat. Large parts of Europe and the U.K. are under strict lockdown measures, which will hurt growth.

The Canadian dollar is trading at its session peak, despite reports that the Ontario government would impose harsh lockdown measures as early as this week.

Elsewhere, Asia markets stocks rallied on the news that the 15 Asian countries, including China, South Korea, Australia, and New Zealand, signed the Regional Comprehensive Economic Partnership (RCEP), creating the largest trading bloc in the world. The deal is expected to help spur the post-COVID-19 economic recovery in Asia.

Japan’s Q3 Gross Domestic Product data helped support the recovery view. GDP Grew 5% y/y, which was faster than expected. However, the government downplayed the results, noting that "the Japanese economy was still in a severe situation due to COVID-19."

AUD/USD and NZD/USD rallied on the RCEP, and Japan GDP news. AUD/USD got an added lift from comments by Reserve Bank of Australia Governor Philip Lowe who said the country was on the road to economic recovery.

EUR/USD rallied in Asia and retreated in Europe and in early N.Y. trading. Traders are cautious as Hungary is threatening to veto the E.U. 2021 budget. EUR/USD technicals suggest further weakness while prices are below $1.1880.

GBPUSD peaked in Asia at $1.32241 then dropped to $1.3167 in early Toronto trading due to Brexit concerns.

Canadian manufacturing and housing reports were passed down 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