Does stock rally signal a light at the end of the tunnel?
Tuesday 9 June, 2020
Daily Currency UpdateCAD - Canadian DollarThe S&P 500 erased all its losses for the year, Asian equities were up overnight, and European stocks are all rising. All of which signals positive sentiment, and that investors are taking risks once again. The Canadian Looney continued its month-long march of gains against the British Pound, the Euro, the US Dollar. Meanwhile, investors are moving away from the USD as the safe haven dynamic shifts. The country’s gradual reopening and Congress’s continued discussion on additional fiscal support provide mixed signals. In addition, Wednesday’s Federal Reserve meeting is drawing much attention. They will announce any interest rate changes in their statement. If you can compare this to 2008, the Federal Reserve did not hike rates until 2015 when unemployment dropped to 5%.Against this backdrop, the US dollar remains under pressure. It slipped against all major counterparts through trade on Monday. The Japanese Yen and Swiss France both enjoyed strong gains, recovering much of lasts weeks losses and topping gains across majors for the day. The upturn for the JPY and CHF suggests Monday’s move was not a typical risk on shift but rather broad-based USD weakness.
Key MoversThe Euro continues to enjoy sustained upside support, holding near 1.52 on open this morning, while the GBP advanced four tenths of a percent pushing toward 1.711. Despite its own underlying instability, the GBP has enjoyed strong gains through the last month, bouncing off lows at 1.68. Given the broad-based USD weakness a better measure or Sterling is its performance against key crosses. The Coronavirus continues to plague the UK. The country reported the lowest number of fatalities since the lockdown began in March and 55 people still lost their lives to COVID-19. As the UK struggles to throw off the coronavirus and Brexit looking ever larger there is little to drive GBP upside through the medium term.
- GBP/CAD: 1.697 - 1.7104 ▲
- USD/CAD: 1.336 - 1.343 ▲
- EUR/CAD: 1.509 - 1.525 ▼