USD/CAD - Canadian Dollar Consolidating Gains

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The Canadian dollar has been on the move lately, and continues to consolidate those gains. Surging West Texas Intermediate (WTI) oil prices, which have risen 33% since last Thursday, are offsetting, to a degree, the latest shift to negative global risk sentiment.

U.S. President Trump appears to have stepped up his "blame-China-for-the-coronavirus" campaign in a flurry of tweets last night. He tweeted "Spokesman speaks stupidly on behalf of China, trying desperately to deflect the pain and carnage that their country spread throughout the world. Its disinformation and propaganda attack on the United States and Europe is a disgrace.... ...It all comes from the top. They could have easily stopped the plague, but they didn’t!”

Trump is definitely using anti-China rhetoric as a re-election strategy, which was evident when he tweeted "China is on a massive disinformation campaign because they are desperate to have Sleepy Joe Biden win the presidential race so they can continue to rip-off the United States, as they have done for decades, until I came along!"

China is also extremely annoyed with the U.S. for what they see as “meddling” in internal affairs. U.S. Secretary of State Mike Pompeo congratulated the Taiwan President for her second term. China responded by saying Pompeo’s actions severely damaged peace and stability in the area.

The tweets and comments did not help risk sentiment in Asia. Traders were already concerned after U.S. equity indexes closed with losses. Asia followed Wall Street’s lead and the major equity indexes closed in the red. S&P futures are suggesting a negative open for Wall Street today.

Traders are looking ahead to this morning's U.S. weekly jobless claims data. The forecast is for an increase of 2.4 million, which is high but better than last week’s nearly three million result. Better-than-expected results should lead to renewed buying of the so-called risk assets, which includes the Canadian dollar.

Yesterday, Bank of Canada Deputy Governor Timothy Lane warned that Canada would emerge from the coronavirus crisis in a weaker position than before. He said supply and demand would be soft due to lower consumer confidence, and inflation would remain depressed.

European and U.K. Manufacturing Purchasing Managers Index reports were better than the previous releases but still showed that deep contractions in their respective economies.

The news was expected and did not have any negative impact on EUR/USD or GBP/USD.

There are not any Canadian economic reports of note available 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