The Canadian dollar is making a move. It is attempting to dig through significant support levels in the USD/CAD $1.3190-$1.3210 zone.
If successful, it could lead to a quick plunge to $1.3100. Canadian dollar buyers are taking their lead from broad U.S. dollar weakness against the major currencies. The weakness stems from a variety of reasons.
Traders are concerned that U.S. economic growth will lag that of its peers, particularly in the Eurozone, especially if the government continues to delay a new stimulus package. Republicans and Democrats are deadlocked in their negotiations. U.S. President Donald Trump’s party proposed a $1.0-trillion package while the Democrats want to spend $3.5 trillion.
The U.S. coronavirus outbreak is still causing concern. The Washington Post reported 55,400 new cases on Wednesday and that the number of deaths was rising.
Trump isn’t concerned. He wants schools to reopen and sporting events to resume.
Trade concerns continue to linger, with the Eurozone in focus. U.S. Trade Representative Robert Lighthizer decided to maintain the 15% tariffs on Airbus.
He said: "The E.U. and member states have not taken the actions necessary to come into compliance with WTO decisions."
There isn’t a lot of top-tier data available today. Weekly jobless claims will get a lot of attention as the report is seen as a real-time barometer for the U.S. economy. Unemployment claims are expected to decline from 1.186 million to 1.120 million. A steady decline in claims suggests the U.S. economy is recovering. However, it will be the 21st week in a row that claims have been over one million.
The New Zealand dollar was the worst-performing G-10 currency overnight. NZD/USD continued to suffer from the dovish Reserve Bank of New Zealand outlook, which was exacerbated by a complaint about the strength of the currency. Deputy Governor Geoff Bascand made things worse when he warned that the latest coronavirus outbreak jeopardized the outlook.
AUD/USD rallied on the back of better than expected employment data. Australia added 114,700 jobs, and the unemployment rate dropped to 7.5% from 7.8%. It couldn’t hang on to the gains and AUD/USD fell to yesterday’s closing level in early Toronto trading.
Traders will be watching U.S. equity market performance. The S&P and NASDAQ closed near record highs, but futures are suggesting a negative open today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
