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Canadian dollar update – Thursday July 23, 2020. USD on life support?

Canadian dollar update – Thursday July 23, 2020. USD on life support?
Arif Harji
by Arif Harji on July 23, 2020

CURRENCY MARKET UPDATE

FX & market recap:

The US dollar sell-off is relentless and threatening to accelerate lower. If US dollar index (USDX) support in the 94.25-60 area crumbles, the bears will have their way with the greenback. The US reported another 68,947 new COVID-19 cases yesterday, in contrast with the Euro area, where the coronavirus outbreak has been beaten into submission. President Trump’s ploy to deflect attention from his and his administration’s bungling of the pandemic management by increasing verbal attacks on China has not resulted in a flight into safe-haven US dollars, although the Euro may be benefiting.

Today’s Jobless Claims report may be worse than expected due to the resurgence of the coronavirus in many US states, forcing officials to shutter previously opened businesses. US equity markets are poised to open higher, as Tesla and Microsoft earnings keep the stock and risk rally alive.

Canadian dollar highlights:

USD/CAD dropped to 1.3373 before bouncing to 1.3390 in early NY trading. Broad US dollar selling against the major currencies and a tick higher in oil prices contributed selling pressure.

Euro highlights:

EUR/USD got within spitting distance of 1.1600 (1.1597) and then shied away, although prices may just be regrouping for another attempt. For some reason “big figures” give traders pause and this big figure represents the 50% Fibonacci retracement level of the 2018-2020 range (1.0653-1.2540). The downside may be limited due to ballooning US government deficits and coronavirus concerns.

British pound highlights:

GBP/USD traded in a 1.2700-1.2753 band and is trading at 1.2714 in NY. The currency pair underperformed against the Euro due to ongoing concerns that UK rates could drift into negative territory and on fears that the EU and UK trade talks will fail.

Asia Pacific highlights:

USD/JPY barely moved as Japan was closed for a holiday. AUD/USD is trading near the bottom of its overnight 0.7124-0.7160 range due to the release of Australia’s budget. Treasurer Josh Frydenberg announced a $281.4 billion deficit for 2019-2020 and 2020-2021.

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