The Canadian dollar made a new 2020 peak overnight as it rode the coat-tails of an AUD/USD rally. The gains did not last for either currency pair.
Canada’s third-quarter gross domestic product rose 40.5%, which looks impressive but isn’t. The results were well below the forecast for a 47.6% gain. The results were ignored as not only were they stale, new coronavirus restriction in place across many regions of Canada suggest November results will be lower.
The Canadian dollar rally appears to be stalling, at least in the short term. USD/CAD rejected losses below support in the $1.2930 area. A rally above $1.2960 today, suggests further gains to $1.3010. However, the USD/CAD downtrend from March is intact while prices are below $1.3230, which suggests any bounce will attract sellers.
The Canadian dollar is closely tracking EUR/USD price action, rising and falling in tandem with the single currency. EUR/USD made a 32-month peak in early European trading when it touched $1.2087. However, a lack of progress on a Brexit deal spooked traders and drove prices to 1.2041 in New York trading. The longer-term technicals support further EUR/USD gains, but the recent sharp rally suggests EUR/USD may consolidate in a $1.1950-1.2080 range before resuming the uptrend.
German Retail Sales rose 2.6% in October, well above the forecast for a 1.2% rise. Eurozone Producer Price Index beat expectations while the unemployment rate was as expected. The news served to limit downside moves.
GBP/USD plunged from $1.3440 to $1.3305 on the back of Brexit disappointment. Today was supposedly the deadline for a deal to enable it to be ratified before December 31. It hasn’t happened. The U.K. became the first country to approve Pfizer’s coronavirus vaccine for emergency cases. The news was lost in the fog of Brexit.
USDJPY is climbing as safe-haven trades get unwound. Prices rose from 104.24 to 104.74, supported by a surge in US 10-year Treasury yields which climbed to 0.92% from 0.85%.
Australia is no longer in recession. At least that is what the latest GDP figures suggest. Q3 GDP rose 3.3%, compared to the 2.7% forecast.
AUDUSD popped to $0.7392 on the news but promptly retreated under a wave of profit taking. NZD/USD followed AUD/USD lower.
The only data of note today is U.S. ADP which is expected to show a gain of 410,000 jobs.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians