The Canadian dollar scraped out a small gain in an uneventful trading session overnight, but is down on the week. The Canadian dollar is a bystander in global FX. Domestic issues, events, and even comments from Bank of Canada officials have limited to zero impact on the currency’s direction. Instead, its value fluctuates on the whims of global risk sentiment.
Traders have a right to be cautious. The 2020 U.S. presidential election is over, but President Trump has not conceded, which means a rather acrimonious transition, once the courts sort it out.
EUR/USD traded sideways in a narrow $1.1800-$1.1833 range overnight, in a somewhat risk-friendly environment. Hopes that a COVID-19 vaccine will be available in the spring have alleviated concerns over current cases, but not at the European Central Bank. Policy makers continue to harp on about the downside risks to economic growth from the second-wave pandemic outbreak, and the necessity to provide more monetary stimulus.
GBP/USD is near the top of its overnight $1.3111-$1.3186. Some analysts suggest the currency is getting a bit of support because government Communication Director Dominic Cummings is quitting, and it may lead to less harsh U.K. trade rhetoric. However, gains are limited as the Brexit deadline nears.
USD/JPY traded sideways in a 104.87-105.14 range. Coronavirus caution, and sliding U.S. Treasury yields are exerting downward pressure.
AUD/USD outperformed NZD/USD, although both currency pairs tracked broad U.S. dollar sentiment, with prices trading with a mildly risk-off tone.
The U.S. economic data highlight is the Michigan Consumer Sentiment Index, which is expected to be 82, compared to the 81.8 last month. Producer Price Index data is also released. The data will not be a factor for traders who are content to track equites and election headlines.
The Canadian economic calendar is empty.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians