The Canadian dollar started today’s Toronto session a touch weaker than where it closed yesterday, compared to the U.S. dollar. Even so, it was the best performing currency overnight as the U.S. dollar extended yesterday’s gains.
EUR/USD and GBP/USD are trading at or near their overnight lows in early Toronto markets.
Both currency pairs are weighed down by broad US dollar demand ahead of the NFP release, weak Services PMI reports, and profit-taking ahead of the weekend. Furthermore, the European Unions lack of a decisive fiscal response to the coronavirus outbreak is weighing on the single currency.
Thursday, FX traders were unnerved by a 6.6-million surge in U.S. weekly jobless claims. The news wasn’t entirely unexpected, but the report underscored the severity of the economic disruption caused by measures to contain the coronavirus outbreak.
There are 1,030,285 confirmed COVID-19 cases worldwide, and the death toll had risen to 54,199 as of this morning. Canada doesn’t make the top-10 list of countries with confirmed cases. It is in 13th spot, but officials are warning, that like the U.S., the number of cases will increase dramatically in the next two weeks.
U.S. non-farm payrolls data for March is due today. The consensus forecast is a loss of 100,000 jobs. That may prove to be far below the actual result, which has underpinned the U.S. dollar in overnight trading. Regardless of the results, no one is questioning the severity of job losses after the aggressive measures taken to stop the spread of COVID-19. Widespread business closures and lock-down rules in major cities have set the stage for massive job losses in April.
Oil prices soared 24% yesterday when President Trump tweeted about the prospect of massive production cuts by the Organization of the Petroleum Exporting Countries. Trump wrote: "Just spoke to my friend MBS (Crown Prince) of Saudi Arabia, who spoke with President Putin of Russia, & I expect & hope that they will be cutting back approximately 10 Million Barrels, and maybe substantially more which, if it happens, will be GREAT for the oil & gas industry! .....Could be as high as 15 Million Barrels. Good (GREAT) news for everyone!"
West Texas Intermediate jumped to $27.20 U.S. from $21.70 U.S./barrel in a flash and then spent the rest of the session and overnight in a $23.50-$26.97 range. There are reports that the U.S. and Canada will be invited to the OPEC call on Monday to discuss measures to support prices and stabilize the market.
Canadian dollar direction will continue to be driven by oil price movements and broad U.S. sentiment.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
