The Canadian dollar has been shuffling between $1.3030 and $1.3170 since last Friday, and it traded well within that range overnight. As usual, price action was driven by ebbing and flowing U.S. dollar sentiment, which was mostly positive, thanks to safe-haven demand.
The U.S. recorded over 166,000 new COVID-19 cases yesterday and the death toll from the virus topped 250,000. New York City announced the closure of public schools and numerous states are enacting restrictions to combat the latest outbreak. Traders are more focused on the current threat from the virus rather than a vaccine which is still months down the road. That shift in focus sparked a wave of “risk-off” trades in Asia and Europe.
The coronavirus is just one concern. The unresolved U.S. presidential election is leaving uncertainty in its wake.
The overnight price action may be a sign of things to come as next week starts the U.S. Thanksgiving holiday season, as FX volumes are likely to be reduced.
European traders had additional concerns, specifically, the European Union meeting. EUR/USD is on the defensive in part because Hungary and Poland blocked the 2021-2027 budget proposal, and as Brexit comes down to the crunch.
European Central Bank President Christine Lagarde gave more hints that the December 10 ECB monetary policy meeting will usher in a new era of even more aggressive stimulus than what already exists.
EUR/USD is trading in Toronto in the middle of its $1.1817-$1.1857 range.
GBP/USD has managed to hang on to most of this week’s gains, even though it is well below its 1.3306 peak, with traders appearing to be expecting positive news on the Brexit front. E.U. Chief Negotiator Michel Barnier will give a progress report to the E.U. membership on Friday. Other reports that say the E.U. will not have enough time to ratify a trade deal if it doesn’t occur by early next week.
However, as has been seen in the past, deadlines are fluid.
AUD/USD sank due to risk aversion sentiment, despite posting robust employment gains. Australia added 178,800 new jobs in October and the unemployment rate dropped to 7.2%.
Today’s U.S. economic reports include Jobless Claims, Philadelphia Fed Manufacturing, and existing housing sales data.