<img src="https://certify.alexametrics.com/atrk.gif?account=HSBGm1akGFL1WR" style="display:none" height="1" width="1" alt="">

Canadian dollar update – Wednesday June 24, 2020. FX skittish on COVID-19 jitters.

Canadian dollar update – Wednesday June 24, 2020. FX skittish on COVID-19 jitters.
Arif Harji
by Arif Harji on June 24, 2020


FX & market recap:

FX markets were rather tame in Asia, but activity picked up in Europe. Risk sentiment was positive after a very robust German IFO Business Climate Survey, and the further easing of coronavirus lockdown restrictions in Europe and the UK.

However, enthusiasm was tempered by a surge in new COVID-19 cases in many US states. Seven US states, including California, reported record-high numbers of hospitalizations. Perhaps the numbers are a result of the belief by many American’s that the US constitution makes them immune to the virus, so wearing masks and social distancing is unnecessary.

President Trump appears to be trying to bolster his re-election hopes. Bashing China, walling off the Mexican border, and slapping tariffs on friends and foes alike got him elected in 2016, and it appears he is using the same playbook for 2020. The US is threatening new tariffs on Canadian aluminium, EUR olive, beer, trucks and other products, and UK gin. S&P futures are also in negative territory.

Canadian dollar highlights:

USD/CAD inched higher overnight, rising from 1.3530 to 1.3582. Broad commodity currency bloc weakness, a dip in crude oil prices after API reported another increase in US crude inventories, and the US tariff threat on Canadian aluminium supported the gains. The US data calendar is light, and the Canadian calendar is empty, leaving FX markets to look to equities for direction.

Euro highlights:

EUR/USD traded sideways in Asia then dropped from 1.1325 to 1.1270 in early European trading before quickly rebounding to 1.1300. EUR/USD consolidated yesterday’s gains with today’s German IFO Business Climate Survey (actual 86.2 vs 79.5 in May) providing some support on hopes for a faster economic rebound in Germany.

British pound highlights:

GBP/USD is trading close to the top of its 1.2467-1.2542 range. Prices slid steadily in Asia and then accelerated lower in early Europe, only to bounce back aggressively. On going concerns around the EU/UK divorce may continue to limit gains.

Asia Pacific highlights:

USD/JPY dropped in Asia, falling from 106.64 to 106.40. The move was due to a whiff of safe-haven demand for yen because of the rise in US COVID-19 cases.