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Canadian dollar update – Monday June 29, 2020. FX focus on US COVID-19 rise.

Canadian dollar update – Monday June 29, 2020. FX focus on US COVID-19 rise.
Arif Harji
by Arif Harji on June 29, 2020

CURRENCY MARKET UPDATE

FX & market recap:

It is going to be a short week. Canada is closed on July 1st for Canada Day, while American’s get a long weekend, starting Friday for Independence Day. FX traders won’t have much incentive to get involved until Wednesday. Fed Chair Powell’s semi-annual testimony to Congress and the minutes from the June 10th FOMC meeting are due that day.

The number of new COVID-19 cases in the US accelerated. The Washington Post reported 242,369 new US coronavirus cases since June 23rd. The question is, “Is this the second wave, or just a continuation of wave 1?”

Today’s Canadian data includes Raw Material Prices and Industrial Product Prices. US releases Pending Home Sales.

Canadian dollar highlights:

USD/CAD rallied to 1.3714 on Friday, ahead of the 11:00 am ET fix, which suggests some pre-month-end demand for US dollars. The S&P 500 is down 1.16% Month-to-date, as of June 26th, which suggests USD/CAD demand by portfolio managers. However, prices quickly retreated and snapped the nascent uptrend and leaving the downtrend line from March (daily chart) intact. USD/CAD traders will bide their time until Friday’s nonfarm payroll data is released.

Euro highlights:

EUR/USD drifted higher overnight, rising from 1.1219 to 1.1280 in NY. The single currency climbed on news that Germany’s parliament approved stimulus measures including a VAT cut, and a better than expected Eurozone Business Climate Index for June (actual -2.26 vs forecast -3.91). The short term technicals favour further gains toward 1.1450, while prices are above 1.1170.

British pound highlights:

GBP/USD traded in a 1.2316-88 range and is just above its session lows in NY. Sentiment is bearish as the EU/UK trade talks resume. Apparently, UK PM told the Polish Prime Minister that he would accept an Austria-style trade deal, which is close to a “no-deal” Brexit.

Asia Pacific highlights:

USD/JPY traded in a narrow range, undermined by a drop in US Treasury yields and concerns about surging coronavirus cases in the US. The short term technicals are bearish while prices are below 107.50, looking for a break of support at 107.05 to extend losses to 106.00.