USD/CAD – Canadian Dollar Rally Deflates

The Canadian dollar soared yesterday morning, then crashed. USD/CAD dropped from Friday’s close of $1.3064 to $1.2930 just after breakfast time in Toronto. The rally was fueled by news that Democrat Joe Biden was moving into the White House.

Prices accelerated after Pfizer said it had a COVID-19 vaccine which was 90% effective in early tests.

Global equity markets, oil, and the commodity block currencies soared in a “risk-on” rally, which lasted until U.S. election dysfunction soured the short-term outlook. The price action was a tad more subdued overnight. Senate Majority Leader Mitch McConnell is supporting President Trump’s decision not to concede the election.

GBP/USD was the star of the show overnight. GBP/USD climbed to $1.3271 from $1.3159 after the British House of Lords voted to remove a controversial section of Prime Minister Boris Johnson’s Internal Markets Bill. That is the section that would have allowed U.K. ministers to break international law.

FX traders decided that the removal of the section significantly improved the odds that the European Union and U.K. will come to terms on a trade agreement.

EUR/USD is choppy in a $1.1781-$1.1842 range. Prices continue to trade with a negative bias following the failure to extend gains above resistance at $1.1920 on Monday. A Joe Biden government is expected to unleash a sizeable COVID Relief stimulus plan and coupled with a COVID-19 implies the U.S. economic rebound will outstrip that of the Eurozone. Weaker-than-expected German and Eurozone ZEW Economic Sentiment data today supported that view.

USD/JPY soared yesterday and consolidated those gains overnight in a 104.83-105.48 range. The unwinding of coronavirus safe-haven trades supports prices, as does the sharp rise in U.S. Treasury yields in recent days.

NZD/USD is grinding higher, rising from $0.6813 to $0.6838 ahead of tomorrow’s Reserve Bank of New Zealand monetary policy meeting. Prices are reacting like a dovish statement is fully priced-in, which may be an error. Policymakers have been getting markets ready for negative interest rates for the past few months, and that will not change.

There are not any meaningful U.S. or Canadian economic releases available today.

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