Home Daily Commentaries Demand falls for CAD

Demand falls for CAD

Daily Currency Update

CAD - Canadian DollarOil fell to a four-month low, lockdowns proceeded ahead in Europe, and equity markets fell. All three of those factors conspired to lower demand for the Canadian dollar.The result, higher demand for the USD, pushed USDCAD up near 1.34 before dropping back to 1.334. South of the border, US GDP grew 7.4% in the third quarter, the largest single quarter gain since tracking began after World War II. Demand for the US dollar increased this morning against the EUR, GBP, AUD and CAD.With just five days left in the 2020 US Presidential election, the candidates have focused on the key states of Florida and Pennsylvania. In Florida, both candidates and their surrogates will make visits. In Pennsylvania, President Donald Trump’s campaign legal team has pushed to restrict mail-in voting rules to limit the time after election day to count ballots. In that state, and others like it, absentee ballots cannot start to be counted until 7am on election day.

Key Movers

It was another shocking day for European equities yesterday as panic spread amongst investors about the rapid escalation in coronavirus cases. To highlight the drop, Germanys index of its top 30 listed companies, the DAX, has fallen over 1000 points since the start of the week dropping from 12,600 to a low yesterday of around 11,460. Record numbers of coronavirus infections have forced the hands of France's President, Emmanuel Macron and Germany's Chancellor, Angela Merkel into announcing countrywide lockdowns for November.New COVID-19 cases will no doubt be highlighted by European Central Bank chief Christine Lagarde in a press conference today which follows the banks latest interest rate decision. No change in policy is expected however we can expect a stark picture to be painted by Lagarde with further easing measures possibly being telegraphed for the December 10th meeting.Yesterday saw some big swings in GBPUSD as a big risk-off move in the market driven by concerns over a surge in cases saw investors seek the safety of the US dollar. After trading around 1.3060 in the early hours GBPUSD took a dive to hit a low of 1.2925 before bouncing back to 1.30 as positive Brexit trade deal headlines came to the pounds rescue. There were rumors that there had been a narrowing of the gap between the two sides on the remaining issues with hopes a deal can be struck in the first half of next month. There have been no official statements from either side so the wait continues, with the pound starting to drift lower again as result. It does appear we are getting closer to an agreement, with each side likely being spurred on by a drastically deteriorating situation re: coronavirus and a hope to limit the additional economic damage that would be caused by the UK defaulting to World Trade Organization rules on January 1st. There is no top tier data for the rest of the week from the UK so the pound's direction will be driven by Covid-19/Brexit/US Election developments. GBPEUR trades around 1.1080.Risk-off remains the underlying narrative this week and currency markets finally caught up with the sell-off across equities and other risk assets, prompting a sharp downward correction for the Australian Dollar. Having touched intraday highs at 0.7160 the AUD suffered a steep and swift sell off overnight.

Expected Ranges

  • EUR/CAD: 1.556 - 1.566 ▲
  • GBP/CAD: 1.722 - 1.734 ▲
  • AUD/CAD: 0.937 - 0.941 ▲
  • USD/CAD: 1.328 - 1.338 ▼