Finance minister resigns amidst pandemic
Tuesday 18 August, 2020
Daily Currency UpdateCAD - Canadian DollarThe resignation of Canadian Finance Minister Bill Morneau sent mixed signals through markets overnight. USD/CAD reached a six-month low in early morning trading, hitting 1.318.It’s the first time the pair has hit levels not seen since before COVID-19 restrictions went into place. Morneau split from Prime Minister Justin Trudeau over deficit spending and the economic stimulus needed to lift the Canadian economy. According to Bloomberg, the Canadian budget gap is likely to top C$100 billion next year, on top of the projected C$343 billion deficit this year (~16% of economic output). A further expansion of debt could result in currency weakness in order to attract new investors and as such it could provide a booth to Canadian stock.
Key MoversSterling remained range round through much of Monday as investors brace for more volatility ahead of new trade talks between the UK and EU. Main topics of discussion include Fisheries’ rights and the UK’s financial sector's access to the Unions markets. Officials are racing to find a compromise before the end of 2020 when the UK will be set adrift from the common market, relinquishing all preferential trade agreements. Unless a deal can be struck Sterling faces significant headwinds.The Australian dollar surged back through 0.72 US cents through trade on Monday, lead higher following a jump in equities and an improvement in risk sentiment. Having struggled to break above 0.7170 through much of the domestic session the Australian dollar rallied overnight touching intraday highs at 0.7225. A continuation in US dollar weakness was the primary driver as softer than expected regional manufacturing data and a dip in business confidence cast doubts over the strength of any US economic recovery to date.
- EUR/CAD: 1.565 - 1.575 ▼
- GBP/CAD: 1.728 - 1.743 ▼
- AUD/CAD: 0.951 - 0.955 ▲
- USD/CAD: 1.315 - 1.323 ▲