The Canadian dollar soared overnight. The domestic currency climbed on a wave of pre-election U.S. dollar selling, and a surge in crude oil prices, but its gains paled in the face of Australian dollar appreciation.
The Australian dollar rose 0.81% after an initial dip around the Reserve Bank of Australia (RBA) monetary policy meeting. The RBA reduced the Overnight Cash Rate (OCR) and the three-year Australia Government bond target to 0.10% from 0.15% for both. They also announced a $100-billion Quantitative Easing program. The news was expected as officials had telegraphed their intentions in a serious of speeches prior to the meeting. AUD/USD initially dropped to $0.7029 from $0.7062, then climbed relentlessly touching $0.7138 in Toronto. It wasn’t all good news. China said it would ban imports of Australian wheat, but the news was lost in the U.S. election noise.
Coronavirus cases rose to another record in the U.S., with 83,154 positive tests reported yesterday. U.S. election news overshadowed the report. The polls are predicting Democrat Joe Biden will become the 46th President of the United States.
EURUSD climbed to $1.1716 from $1.1639 in Toronto trading. Hopes for a Biden win are driving gains because of anticipated massive Democrat spending plans. The short-term technicals suggest the rally is just a correction, while prices are below $1.1750.
GBP/USD rallied to $1.3004 from $1.2916 Widespread U.S. dollar weakness, and hopes for news of a break-though in the EU/UK trade talks supported the gains. However, expectations for a very dovish Bank of England policy meeting on Thursday and new coronavirus lockdown measures.
The Canadian dollar rallied. USD/CAD fell from $1.3232 to $1.3139 because of widespread U.S. dollar weakness and the surge in oil prices. WTI oil rose from $33.70/barrel to $38.25 today, 13.5% since yesterday. A Bloomberg article said the Organization of the Petroleum Exporting Countries may delay the easing of production cuts which boosted prices.
There are not any Canadian economic reports on tap today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
