Canadian Dollar marks fresh highs as US slide gathers momentum
Wednesday 19 August, 2020
Daily Currency UpdateCAD - Canadian DollarThe Canadian dollar extended its rally through trade on Tuesday amid record gains across equities and sustained US dollar weakness. The S&P 500 marked fresh highs and appears poised to close above the February 2019 peak. As COVID-19 case numbers across the US are trending in the right direction markets have chased risk assets higher to fuel the fastest recovery on record. The USD/CAD followed equities dropping to a six-month low at 1.318. The wide held market consensus is for a weaker US dollar. Having traded to its lowest level in 6 months amid a run of speculative short positions, questions are being raised as to how far the dollar can slide. While we have seen a renewed demand to short the world's base currency, when compared with past dollar downturns it would appear there is ample scope for further weakness.With little headline data on hand today attentions turn to the Federal Reserve and FOMC meeting minutes. Many expect the Fed will amend its average inflation rate tolerance investors will be keenly attuned for any commentary that suggests a change is imminent.
Key MoversThe Australian dollar extended its rally through trade on Tuesday amid record gains across equities and sustained US dollar weakness. The S&P 500 marked fresh highs and appears poised to close above the February 2019 peak. The Australian dollar followed equities pushing through 0.7250 to touch intraday and year to date highs at 0.7265. Great British pound advanced against both the euro and US dollar in the past 24 hours as Brexit talks resume. GBP/EUR remains range bound, but movement overnight has taken the currency pair from 1.1030 to above 1.1100 and GBP/USD is now back above 1.3250, which were the levels seen prior to sterling’s Covid-19 crash back in March. However, it is worth mentioning the movement in GBP/USD has more to do with US dollar weakness than it does pound strength, as the ongoing effects of the Federal Reserve’s stimulus programs and lowered expectations for fresh stimulus saw the US dollar fall.
- EUR/CAD: 1.565 - 1.573 ▲
- GBP/CAD: 1.735 - 1.745 ▲
- AUD/CAD: 0.951 - 0.956 ▲
- USD/CAD: 1.313 - 1.318 ▲