USD/CAD – Canadian Dollar Demand for Month-End

The Canadian dollar traded firmer in a relatively quiet overnight session.

USD/CAD dropped from $1.3023 at Thursday’s close to $1.2986 in early Toronto trading, on the back of broad U.S. dollar weakness and some month-end positioning.

The S&P 500 rose 11.0% since November 1, which means some equity portfolio managers need to rebalance their hedges to conform to their mandates. The strong gains mean they need to buy Canadian dollars. Managers may have executed trades ahead of month-end due to the U.S. Thanksgiving holiday.

The USD/CAD selloff stalled on support in the $1.2985-90 level.

A decisive break below targets additional support in the $1.2940-50 zone. Steady to firm crude oil prices are adding to the selling pressure.

West Texas Intermediate traded with a positive bias rising from a low of $44.58/barrel to $45.60 overnight. Traders are expecting the Organization of the Petroleum Exporting Countries and Russia to extend existing production cuts to March 2021. Traders expect the reduced production levels and the expected, vaccine triggered, global economic rebound to lift prices further.

AUD/USD traded with a bullish bias in a $0.7354-0.7385 range despite new hostility from China. Beijing announced they would impose tariffs of up to 212% on imports of Australian wine, citing unfair subsidies. The news follows China’s assault on Australian coal which they claim has environmental quality concerns. These actions are occurring even though China and Australia are members of the new Regional Comprehensive Economic Partnership (RCEP).

NZD/USD continues to be underpinned by greatly reduced risks that the Reserve Bank of New Zealand will adopt negative interest rates. It said so at its November 11 meeting noting that “negative rates don’t seem necessary.”

EURUSD continues to consolidate gains in a $1.1909-1.1932 range. Gains were capped at $1.1932 by another round of soft economic data. Industrial and consumer confidence indicators were soft

GBPUSD is in the Brexit doldrums. Prices dropped from 1.3380 to 1.3312 in early Toronto trading, on concern about a lack of progress in Brexit talks. European Union Chief negotiator Michel Barnier is meeting his U.K. counterpart in London today amid reports that both sides are far apart on key issues.

U.S. equity markets close early today. The Canadian and U.S. economic calendars are empty.

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