The Canadian dollar closed September with a 2.4% loss against the U.S. dollar. The British pound and was the worst-performing currency, followed by the Australian dollar. Only the Japanese yen managed a gain, and it was just 0.30%.
The U.S. dollar rally appeared to come to a halt yesterday as month-end portfolio manager demand for U.S. dollars abated. The commodity currency bloc surged, with the Australian dollar rising 1.1%, the New Zealand dollar gaining 0.94% and the Canadian dollar climbing 0.84%.
FX risk sentiment took a turn for the better on reports that U.S. Republicans and Democrats were close to agreeing on a new COVID-19 stimulus package. Also, better than expected ADP employment, Chicago Purchasing Managers Index, and Home Sales data showed the U.S. economic recovery was continuing.
Overnight, Asia equity markets were quiet, due to Golden Week holidays in China, along with holiday’s in Hong Kong, Taiwan, and South Korea.
The Tokyo stock exchange suffered a major technical problem, and it was forced to close for the entire day. European stock markets managed to post gains, as stimulus hopes fuel the rise in US equity futures.
GBP/USD whipsawed between Europe and early Toronto trading Prices dropped from $1.2947 to $1.2821, after news that the European Union began legal proceeding against the U.K. for changing the Brexit Agreement. The E.U. is accusing Britain of failing to act in "good faith."
In addition, report that the Reuters reported that EU/UK trade talks have "stalled on subsidies, fisheries and ways to solve disputes." The sell-off quickly reversed and GBP/USD soared to $1.2975.
EUR/USD inched higher alongside the latest GBP/USD rally, but ongoing concerns around European Central Bank issues with the level of the exchange rate, COVID-19 outbreaks, and weaker than expected economic data are acting as a drag on gains.
EURUSD is trading just below the top of its $1.1718-1.1768 overnight range.
The Canadian dollar continues to ignore oil price action, domestic data, and Canadian political developments. It has also de-coupled somewhat from EUR/USD moves and is more correlated with the antipodean currencies, in recent days. The improved risk tone has boosted the commodity currencies.
Traders are looking ahead to today’s weekly jobless claims and Institute for Supply Management Manufacturing Purchasing Managers Index data, as better than expected results would indicate the U.S. economic recovery is continuing. There are not any Canadian economic reports of note, today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
