The Canadian dollar recouped some of yesterday’s lost ground in an uneventful, low-volume overnight session. Its direction continues to be determined by every shift in U.S. dollar sentiment, and today’s sentiment is cautiously bearish for the greenback. Canadian Gross Domestic Product for October is expected to rise just 0.2%.
U.S. President Trump threw a wrench into plans for the COVID-19 Relief bill that Congress agreed to on the weekend. To say that Trump was unhappy is an understatement. He called the Relief bill “a disgrace” in a six-minute video released last night. He said that the 5,000-page Relief bill contains a lot of spending for everything but COVID-Relief. He complained that the bill had money for numerous third-world countries, money for museums which were closed, and even money to “count fish,” and was outraged that the bill only provided $600 for Americans and little to nothing for restaurants, etc. He demanded that individual Americans receive $2,000 per family member, or else he hinted he wouldn’t sign the bill.
FX markets were not overly concerned with the U.S. political developments. Instead, prices were driven by GBP/USD moves. U.K. and E.U. trade negotiations are ongoing. There is talk that the official Brexit date of December 31, is not necessarily the absolute final day when a “hard” Brexit occurs if there is not a deal. Instead, some believe the E.U. and U.K. could agree to extend the date, enacting any legislation required to skirt legal issues.
GBP/USD climbed from $1.3361 in Asia to $1.3443 in Europe, and has been consolidating in a $1.3415-$1.3430 range in Toronto trading. Prices were supported by news that France eased border restrictions and is allowing U.K. freight traffic into the country.
EUR/USD is trading with a modest bid, supported by broad-based U.S. dollar weakness, however gains are limited because of ongoing concerns that the COVID-19 restrictions will be a drag on Q1 economic growth.
There are plenty of U.S. economic reports released today. However, the resurgence of coronavirus cases across the U.S. suggests today’s data is too stale for those traders working, to care.
Initial Jobless Claims are forecast at 883,000, November Durable Goods Orders expected to rise 0.6% (October 1.3%) and New Home Sales are expected to be unchanged. Michigan Consumer Sentiment is expected to be largely unchanged at 81.3.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians