Daily Currency Update

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The Loonie soars following a bounce in crude oil.

CAD - Canadian Dollar

Market participants pushed the Loonie FX crosses higher this morning while we await updates of global oil demand forecasts from the Organization of the Petroleum Exporting Countries on Thursday and the International Energy Agency on Friday. The reality is that crude oil and the Loonie seem to be bouncing in a technical correction more than due to a change in fundamentals.

Regarding the U.S. - China trade war, both countries are going to talks this week with different perspectives on what a likely resolution would look like. The Chinese delegation, lead by premier Liu He, said they would bring an offer that won’t include commitments on industrial policy or government subsidy reforms, inferring that the range of topics they’re willing to discuss has narrowed considerably. On the flip side, Trump said that any deal agreed to would have to be "100%". It seems like Trump’s hand is losing strength after the impeachment process against him. This situation is hurting optimism in the capital markets and both the Loonie and crude oil are bouncing in a waiting mode after the sell off last week.

The USD/CAD pair is falling 0.05 percent (stronger Loonie) towards the 1.3300 handle this morning.

Key Movers

The conflict between President Trump and House Democrats over the impeachment inquiry is getting worse. Andrew Bakaj, the attorney for the first whistleblower who explained attempts by President Trump to press his Ukrainian counterpart to investigate a political rival, is pointing out that his firm represents, “multiple whistleblowers.” Mark Zaid, another attorney representing the initial whistleblower, added that there is a second whistleblower with fresh knowledge of some accusations related to the initial charge. This situation will add more fuel to the initial problem and likely cause more volatility in the FX market.

Boris Johnson said in a defiant tone that the U.K. will leave the EU as planned, regardless of whether the EU accepts his latest offer. The thing is that he has until the end of this week. The PM is prepared to launch legal action at the Supreme Court to avoid having to write a letter asking for a delay to Brexit as set out in the Benn Act. Prospects of a Brexit deal are fading after talks between the two sides stalled and European leaders cast doubt on reaching an agreement in time for Halloween. This week can be decisive for the future of the U.K. and there are more questions than answers. Can Johnson get a Brexit deal, and is he even trying to? Will he delay Brexit or take Britain out without a deal?

Bank of England Governor Mark Carney found himself center-stage after the original Brexit vote in 2016, and would likely do so again.

German factory orders came lower than the expected number of -0.4 percent. According to the Federal Statistical Office in Germany (Destatis), price-adjusted new orders in manufacturing decreased in August 2019 a seasonally and calendar adjusted 0.6 percent on the previous month. As a consequence the EUR/USD pair decreased 20 pips in overnight trading towards 1.0962, but it has bounced from there, almost touching the 1.100 handle around 8 am EST.

Expected Ranges

USD/CAD: 1.3285 - 1.3335 ▼

EUR/CAD: 1.4603 - 1.4690 ▲

GBP/CAD: 1.6355 - 1.6507 ▼

AUD/CAD: 0.8958 - 0.9032 ▼

NZD/CAD: 0.8346 - 0.8421 ▼