Canadian dollar update – Wednesday July 8, 2020. Canadian government to drop deficit bomb today.
FX & market recap:
FX markets were choppy but locked in well-defined ranges in overnight price action. Chinese equities surged higher, in contrast with the rest of the major global indexes. European stocks are lower, and S&P 500 futures are flat. All in all, a sleepy, uneventful session.
New US coronavirus cases topped 60,000 yesterday, another single-day record. The US/Canada border is closed until July 31. Soon, Canadians will demand a wall across the 49th parallel to contain what continues to be an explosive surge of cases in the US.
There are not any economic reports of note.
Canadian dollar highlights:
USD/CAD is the only G-10 currency pair to have risen since yesterday’s NY open which may be due to “Sell North America” sentiment in FX markets. USD/MXN is also higher. Canada and Mexico may be lumped in with concerns about the renewed COVID-19 outbreak in the US.
USD/CAD direction appears to be closely correlated with Wall Street price action as well. Finance Minister Bill Morneau is expected to announce a Federal Budget well-north of $300 billion. USD/CAD is vulnerable to further gains, depending on how Mr. Morneau spins the news.
EUR/USD dipsy-doodled in a 1.1263-93 band. Downside pressure stemmed from yesterday’s EU Commission downgrade of 2020 GDP growth, while losses were limited by hopes of a Euro area recovery, helped by the EU COVID-19 Relief plan. EUR/USD continues to bounce in a 1.1170-1.1350 range.
British pound highlights:
GBP/USD is trading in NY in the middle of its 1.2510-1.2567 range. Price support stems from expectations that the pending UK budget announcement will boost the currency pair. UK Chancellor of the Exchequer Rishi Sunak may be announcing a new £2.5 billion stimulus plan. GBP/USD is in an uptrend above 1.2470, looking for a break above 1.2590 to extend gains to 1.2800.
Asia Pacific highlights:
USD/JPY traded in a 107.44-107.70 range. Safe-haven demand for yen and soft US Treasury yields weighed on prices while better than expected Economy Watchers survey data limited the downside.
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