Daily Currency Update
CAD - Canadian DollarDespite market sentiments moving away from equities, the Canadian dollar fluctuated modestly against the US dollar.Markets have been driving demand for commodity currencies, but this morning the Canadian dollar withstood a drop in equity markets. USDCAD hit its lowest level in a month.Oil prices could remain low over the next month because of a glut of production. Operations in the US Gulf of Mexico are expected to resume following Hurricane Delta. In north Africa, Libya to another step in reopening its biggest oil field.
Key Movers
Prime Minister Boris Johnson said that the time left to get a post Brexit trade deal in place is in “short supply” and he is ready to walk away if there is no agreement with the European Union by Thursday. Fishing rights and state aid are the two remaining issues. The EU wants the UK to follow its state aid rules and to give their fishing fleets full access to UK waters. Downing Street has said that they are trying to “bridge” disagreement over these two areas, however, if both sides do not come to an agreement, they will either have to extend the October 15 deadline or settle for a “no deal” and do business under World Trade Organization (WTO) rules. Both scenarios will lead to further uncertainty and could see both GBP and the Euro falling against their major counterparts.The Australian dollar failed to maintain the momentum enjoyed into the close last week, edging lower through trade on Monday despite a largely positive risk narrative and an uptick in equities and risk assets. The Australian dollar failed to follow stocks higher as the ASX, S&P500 and Nasdaq all enjoyed strong gains, instead intervention from the Peoples Bank of China to correct the recent Yuan appreciation spilled over into AUD demand forcing the Aussie dollar back toward 0.72 US cents. The PBoC removed minimum cash requirement regulations on Forwards at the weekend while marking the daily reference rate 1% lower than Friday’s fix. Often seen as a proxy to the Yuan the AUD was forced lower giving up 0.7235 to touch intraday lows at 0.7204. With little of note on the domestic docket today, attentions turn to Thursday’s employment report. Unemployment is expected to push beyond 7% despite the efforts of Jobkeeper Payment program. A poor print will likely add mounting pressure on a November RBA rate cut.
Expected Ranges
- EUR/CAD: 1.542 - 1.550 ▲
- GBP/CAD: 1.703 - 1.714 ▲
- AUD/CAD: 0.940 - 0.946 ▲
- USD/CAD: 1.310 - 1.313 ▼