The Canadian dollar rally has stalled, for the moment. FX traders are unhappy with the lack of progress in Brexit negotiations and U.S. government COVID-19 Relief talks. FX volumes are also decreasing as the year winds down, which leaves the major G-10 currencies vulnerable to random price swings.

The Canadian dollar is riding the wave of positive risk sentiment as the rollout of coronavirus vaccines fuels demand commodities demand. The Canadian, Australian, and New Zealand dollars are considered commodity currencies, and all have risen in the current environment.

Global equity markets are in the red. The major Asia equity indexes closed with small losses (except for Australia’s ASX 200), and European indexes are also down. Wall Street is poised to open in negative territory, as profit-taking weighs on prices. Oil prices are a tad softer, and gold prices are unchanged from Monday’s closing levels.

GBP/USD is under pressure in early Toronto trading, having dropped from $1.3355 to $1.3299. Traders are paring positions as risks for a “no-deal” Brexit rise. Prime Minister Boris Johnson is expected to meet European Union Commission President Ursula von der Leyden for face-to-face talks this week, with a Brexit deal on the line. Ms von der Leyen said, “that the conditions for an agreement are not there.” France is adamant about maintaining fishing rights and the U.K. is unwavering on their demand that they are not subject to EU laws.

EUR/USD could not get any traction and is stuck in a $1.3100-$1.3133 range. German ZEW Survey and Euro area economic reports didn’t spark any interest.

The ZEW Economic Sentiment and Expectation surveys were marginally better than expected, while the Current Conditions survey was a tad weaker. Euro-area Q3 Gross Domestic Product rose 12.5% q/q compared to the forecast for a 12.6% q/q rise. Nevertheless, the short-term EUR/USD technicals are bullish while prices are trading above $1.2040.

USD/JPY didn’t go anywhere. Prices stayed in a 103.97-104.15 range despite the Japanese government unveiling a new $700-billion stimulus package. That’s because it was widely expected.

AUD/USD and NZD/USD bounced about in well-defined bands. AUD/USD traders ignored reports that China halted beef imports from a significant producer. Australia and the Chinese government are feuding ever since Australia asked for an independent COVID-19 inquiry.

There are no U.S. or 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

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