The Canadian dollar continues to dance around resistance as it follows the lead of its antipodean counterparts. The USD / CAD pair closed at $ 1.2820 yesterday and declined steadily overnight, erasing all gains from yesterday afternoon. Nonetheless, the price action is just noise in the $ 1.2765 to $ 1.2830 range that has contained the price action since December 4.
The Bank of Canada is expected to leave interest rates and monetary policy unchanged today. There won’t even be a press conference. There is a risk that the statement could focus on the downside risks to their outlook, thanks to the second wave of the pandemic epidemic in Canada. Even so, the USD / CAD direction is dictated by the overall sentiment of the US dollar, and at the moment that sentiment is negative.
AUD / USD fell from $ 0.7406 to $ 0.7479, and this move helped USD / CAD sell off. AUDUSD is benefiting from bullish techniques and expectations of a global economic boom in 2021.
GBP / USD rebounded to $ 1.3488 after closing at $ 1.3357 yesterday. Policymakers are putting a positive spin on Brexit negotiations, with many appearing confident a deal will be reached. There are reports that the UK is ready to make concessions on overfishing.
German Chancellor Angela Merkel noted that the main stumbling block is regulation. The European Union wants Britain to maintain regulations on workers’ rights, taxation, environmental protection and state aid. Britain is adamant that these regulations are the main reasons it chose to leave the EU in the first place. European Commission President Ursula von der Leyden and British Prime Minister Boris Johnson will have a face to face meeting today.
EUR / USD rebounded in Asia, peaked in Europe, then erased the move in its entirety, as trading began in Toronto. EUR / USD demand stemming from general risk sentiment is offset by concerns about the impact of existing coronavirus measures on the euro area economy. Traders are also a little cautious ahead of Thursday’s EU leaders meeting.
The Canadian dollar is also benefiting from stable to firm oil prices, although this support may not last. The American Petroleum Institute said weekly crude inventories rose 1.1 million barrels last week, after increasing 4.1 million barrels the week before.
Foreign exchange volumes begin to decline before the seasonal holidays and the end of the year. There are no American or Canadian economic reports worthy of note today.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian bureau de change that offers Canadians better rates than banks.