The Canadian dollar traded sideways in an uneventful holiday market session. USD/CAD peaked at $1.2955 on December 25 but failed to penetrate support in the $1.2800 area, today. The price action is choppy due to holidays and will remain in that state for the rest of this week.
The European Union and the United Kingdom finally agreed to a trade agreement and put Brexit concerns on the scrap heap. GBP/USD rallied in the lead-up to the announcement, rising from $1.3197 on December 21, and touching $1.3615 when the deal was confirmed. Many analysts believed that a Brexit deal was fully priced in, which helps explain the GBP/USD drop from the peak level to $1.3430 on Monday. The downside was limited by a resurgence of positive risk sentiment on the back of news that U.S. politicians reached a deal on the long-awaited COVID-19 Relief bill.
Asia equity indexes closed with gains, except those in China, while the U.K. FTSE 100 is leading European indexes higher. Wall Street is poised to open with gains. Gold prices are flat and oil prices are higher.
EURUSD is trading at the top of its $1.2160-$1.2270 range, which has contained price action since December 17.
The single currency is supported by a boost in positive risk sentiment after a U.S. COVID-19 Relief plan was announced on Christmas Eve.
President Trump signed the $900-billion bill, but insisted the stimulus cheques be increased to $2,000.00 from $600.00. House Democrats agreed to Trump’s request, and now it’s the Senates turn. EUR/USD is also underpinned by EUR/GBP demand.
USDJPY rallied due to the latest round of "risk-on" sentiment, and the unwinding of safe-haven yen trades. Prices were also supported by steady US treasury yields.
AUDUSD traded in a $0.7555 to $0.7620 range since Christmas Eve with price action tracking the ebb and flow of risk sentiment. NZD/USD price action mirrored that of the Aussie.
The Canadian dollar is supported by the mix of positive risk sentiment, and higher crude oil prices. Direction is still dictated by US dollar sentiment.
There are not any Canadian economic data today. The Case-Shiller home prices report is on tap in the U.S.. FX trading will be erratic due to poor liquidity.
