– Covid protests raise risk aversion fears
– New Chinese Covid cases soar over 40,000
– US dollar rallies and CAD is the worst performing major G10 currency
USDCAD snapshot open 1.3434-38, overnight range 1.3397-1.3472, close 1.3381,
WTI $73.78, Gold $1760.55
The Canadian dollar gapped lower at the Asian open and never looked back.
A wave of risk aversion sentiment washed over equity, bond, and stock
markets leading to safe haven demand for US dollars.
Traders were unnerved after reports of widespread civil unrest in many
cities in China. People are pushing back the Covid-zero policies and are
tired of lockdowns, closures, and other restrictions.
Meanwhile, China is suffering from a new coronavirus outbreak with new daily
cases rising to 40,020 on November 27.
That was all the news Asia traders needed to buy safe-haven US dollars and
many currency pairs gapped lower when Asia markets opened on Monday.
The Canadian dollar was one of them. USDCAD closed at 1.3381 Friday, opened
at 1.3397 then soared to 1.3472 before retreating in Europe.
The Canadian dollar came under additional pressure after West Texas
Intermediate (WTI) extended last week’s slide and fell to $73.63/barrel.
Fears of slowing demand from China due to an array of Covid restrictions and
news that the US is allowing oil shipments from Venezuela. Are driving
prices lower. However, Opec may not be too happy with the latest
developments and may take steps to shore up prices when the cartel meets at
the end of the week.
EURUSD dipped in Asia then rallied from 1.0342 to 1.0496 underpinned by
hawkish comments from ECB officials. Dutch central bank President Klaas
Knot suggested that rate hikes will continue despite recession risks.
Traders are awaiting Wednesday’s German and eCB inflation reports.
GBPUSD rallied from 1.2028 in Asia to 1.2117 in europe before retreating to
1.2089 in NY. Some analysts believe GBPUSD is vulnerable to a correction
lower due to concerns the market is too aggressive with its peak interest
rate pricing. Despite the overnight volatility GBPUSD opened unchanged from
where it closed Friday.
USDJPY fell to 137.50 from 139.41 due to safe-haven demand for yen.
AUDUSD traded negativley in a 0.6667-0.6727 range undermined by the latest
bout of risk aversion snetiment and weaker than expected Australian Retail
Sales data.