Daily Currency Update

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Without a clear winner, uncertainty prevails

CAD - Canadian Dollar

The 2020 US President Election took center stage for the currency markets overnight as volatility in the exchange rates picked up some momentum.

USDCAD traded as low a 1.309 and as has high 1.329. As of this morning, it landed somewhere near the middle.

The chances of a Democratic clean sweep have certainly been thrown out of the window this morning, and with it the chances of a substantial stimulus package being put together to support the US economy any time soon. This appears to be the most important thing for the market, as a suitable stimulus package will help to renew US demand for global products.

Key Movers

Betting houses in the UK now have Trump as the favorite to be the next US president, but if this does materialize, it isn’t going to be a quick process. This could leave the currency markets up in the air and an extended period of volatility for the markets. Previous elections have seen more than 3% swings in EURUSD, GBPUSD and GBPEUR, as well as the stock markets. GBPUSD traded as high as 1.3150 after Florida was declared for President Donald Trump. The dollar then strengthened substantially on the back of the speculation around how this could impact a stimulus package in the US after this election.

Having touched intraday lows at 0.7025 in the aftermath of the Royal Bank of Australia policy announcement, the Australia dollar rallied one and a half cents overnight to touch daily highs at 0.7175. Markets largely ignored the RBA’s policy announcement having priced in the 15-basis-point rate cut and $100 billion QE program. In an ironic twist the RBA policy move was designed to drive the AUD lower, amid hopes it will help support Australian Exports through the recovery. The muted response and overnight surge illustrate the importance of sentiment in the current environment.

Expected Ranges

EUR/CAD: 1.538 - 1.548 ▲

GBP/CAD: 1.705 - 1.721 ▲

AUD/CAD: 0.936 - 0.943 ▼

USD/CAD: 1.309 - 1.329 ▲