Canadian dollar update – Tuesday August 11, 2020. Greenback opens with gains across the board.
FX & market recap:
Asia equity markets rallied on the heels of Wall Street gains while ignoring the tiny dip in the NASDAQ. Japan’s Nikkei 225, Hong Kong’s Hang Seng, and Australia’s S&P/ASX indexes closed higher. European stock traders picked up the ball and ran with it, boosting Germany’s DAX index 2.69% at the NY open, while driving S&P futures to record highs.
FX traders were a little slow off the mark. The US dollar was steady in Asia with the US dollar index in the 93.70 area before Europe opened. Traders noted the stock market gain’s and sold US dollars. The risk rally is occurring despite the US Congressional impasse on a new stimulus package. Canada Housing Starts and US PPI data re on tap today.
Canadian dollar highlights:
USD/CAD dropped with the broad US dollar retreat. The currency pair saw added selling pressure from the rise in oil prices. Yesterday Saudi Aramco officials forecast rising crude demand for the rest of the year. Only a cynic would suggest USD/CAD is retreating because of chatter that Finance Minister Morneau will be dumped. There is a lot of talk that Trudeau’s newest advisor, former Bank of England Governor Mark Carney, would get the job if he wins an upcoming by-election. Carney hasn’t even said he would run, but reportedly, aspires for high political office.
EUR/USD soared from its Asia low of 1.1723 to 1.1807 in NY trading. Relatively positive German and Eurozone ZEW data fueled the gains, alongside rising equity markets, and reports that new US COVID-19 cases are declining. The ZEW institute said the “Indicator of Economic Sentiment for Germany increased again significantly compared to the previous month, after having declined slightly in July.”
British pound highlights:
GBP/USD to 1.3055 from 1.3088 when the employment data was released. The UK added 94,400 jobs, and the unemployment rate was unchanged at 3.9%. Prices recovered rapidly and climbed to 1.3114 in NY trading thanks to markets shifting to risk-seeking.
Asia Pacific highlights:
USD/JPY is choppy in a 105.94-106.23 band. Prices are underpinned by hopes for success with the ongoing US Congressional COVID-19 relief talks and the rise in US Treasury yields which climbed from 0.548% to 0.602%.
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