Daily Currency Update
CAD - Canadian DollarDemand for the Canadian dollar closed well in the positive last week and opened the week at 1.293 as the US election dominated currency movements. With President-elect Joe Biden in the hot seat and the S&P 500 soaring, global risk assets followed suit with the Loonie no exception. The Pandemic Election kicked off last Tuesday and almost immediately added volatility into foreign exchange markets globally. As the counting began and the results filtered through, demand for CAD found support from any sign that Biden would win the election. Nevertheless, the election again made a mockery of the polls with the race becoming too close to call on several occasions and the favorite fluctuating throughout the count. The USDCAD followed proceedings in kind with movements to 1.30 at one point but ultimately found its feet as it become clear that Biden was pulling ahead in key battleground states. As the market drew to a close on Friday and the election still too close to call, the demand for CAD continued for a Joe Biden victory and stayed well supported at 1.303 to record a relatively stable day for what proved to be an erratic week at times.The week ahead looks to be relatively quiet on the economic calendar with direction to again be dictated by US politics and COVID-19. While the election result reported by major US media firms seems clear and decisive, President Donald Trump has thus far refused to concede. Furthermore, unsubstantiated allegations of fraud and malfeasance by President Trump have added uncertainty into proceedings and in-turn financial markets.
Key Movers
Haven currencies found little support during election week with the US Dollar, Swiss Franc and the Japanese Yen all softening as President-Elect Biden pulled ahead of President Trump. Risk assets outperformed consequently with equities and commodity currencies doing particularly well. This comes despite President Trump's claims of victory and fraudulent voting casting dispersions on the outcome of the election and adding an element of uncertainty. Furthermore, the market continues to shrug off the threats of a Trump legal challenge as non-credible.Last week was a busy end to the week for Sterling. On Thursday the Bank of England voted unanimously to keep rates on hold at 0.1%, however they did vote for an increase of £150bn of the bond purchasing program in a bid to boost the economy through the second wave of lockdowns across the UK. This will take the total amount of quantitative easing from £745bn to £895bn. Surprisingly this move by the Bank of England saw investors buy Sterling, with GBPUSD trading from mid-1.29s on Thursday morning to mid-1.31s by the end of the week.
Expected Ranges
- EUR/CAD: 1.532 - 1.551 ▲
- GBP/CAD: 1.703 - 1.717 ▲
- AUD/CAD: 0.944 - 0.950 ▲
- USD/CAD: 1.293 - 1.304 ▲