USD/CAD - Canadian Dollar Rally Gathers Steam - InvestingChannel

USD/CAD – Canadian Dollar Rally Gathers Steam

The Canadian dollar rallied again overnight, alongside the rest of the G-10 major currencies. Only JPY and CHF skipped the party. They opened close to unchanged from where they closed on Monday.

The Canadian dollar rally does not have anything to do with domestic influences. It is all due top broad US dollar sentiment, and that sentiment is bearish. Traders are euphoric about the easing of COVID-19 lockdown restrictions around the world, particularly in the U.S. Judging by the scope of equity market gains, and U.S. dollar losses, traders, appear convinced that global economies will rebound rapidly and robustly.

Traditional concerns about ballooning government deficits, the risk of rising inflation due to pent-up demand for products and services, and new, escalating trade tensions between the U.S. and China are being ignored.

Even the Reserve Bank of Australia is optimistic, albeit cautiously. At its meeting today, the RBA left interest rates and policy unchanged, while issuing a somewhat upbeat outlook. Bank governors said “it is possible that the depth of the downturn will be less than earlier expected. The rate of new infections has declined significantly, and some restrictions have been eased earlier than was previously thought likely.”

The AUD/USD rallied on the news, rising from $0.6776 to $0.6868, with the rally fueled by broad U.S. dollar selling and higher commodity prices. NZD/USD followed suit, rising from $0.6265 to $0.6325.

USD/JPY climbed to 108.11 in early Toronto trading, extending its overnight gains, in part due to fears that the current unrest in America will delay the U.S. recovery, especially if President Trump follows through on threats to unleash the military on protesters.

EUR/USD continues to grind higher and is trading close to the top of its overnight 1.1116-1.1187 range, in Toronto. The rally continues to be powered by optimism about the European Union proposal for an €825 billion COVID-19 relief fund. It got an added boost today when the German government announced a new €80-billion stimulus plan.

GBP/USD followed EUR/USD higher, rising from $1.2480 to $1.2575. Part of the gains were due to hopes of a breakthrough in the EU/UK trade talks this week.

A jump in crude oil prices bolstered the Canadian dollar. The Organization of the Petroleum Exporting Countries and Russia are reportedly nearing an agreement on extending production cuts to September 1.

The Canadian economic calendar is empty today. U.S. data is second tier, leaving stock markets to provide FX direction.

Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians

Related posts

Carl Icahn Increases His Stake In Take-Two Interactive To 10.68%

ValueWalk

iPad Mini Display Outperformed By Kindle Fire HD & Nexus 7

ValueWalk

Foxconn Might Open Manufacturing Plants In The U.S. [REPORT]

ValueWalk

Peter Cundill Protégé Tim McElvaine on Investing in Japan [VIDEO]

ValueWalk

Set Bing Home Page Image As Lock Screen In Windows 8

ValueWalk

Morning Market News: JCP, APO, MCHP, ZIP, ENR, LGF, EA, ATVI, COV, LNT

ValueWalk