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November 27, 2020

USDCAD open (6:00 am ET) 1.2990-94  Overnight Range 1.2986-1.3023

  • Trump says he will leave White House if Electoral College picks Biden
  • Brexit talks continue today
  • US dollar extends slide in quiet FX action

FX Ranges at a Glance 

Source: IFXA Ltd/RP

FX Recap and Outlook: Black Friday sales are everywhere.  Many started last week.  The day after Thanksgiving is the traditional start to Christmas shopping in America, and Canada and other countries have copied the tradition, albeit without the riots and gun battles.  It looks like the US dollar is on sale as well.

The greenback is ending a “risk-off” week with losses against the G-10 significant currencies, except for JPY, and GBP. Compared to Monday’s opening levels.  Gold prices are down 3.1%, while WTI oil rose 7.1%.  Part of the reason for the US dollar weakness may be due to month-end portfolio rebalancing, at least for CAD.  The S&P 500 is up 11%, MTD, which suggests managers need to sell USDCAD to rebalance their hedges.  Some trades may have been executed early because of the holiday.

President Trump said he would leave the White House if the electoral college votes for Biden, on December 14.  It’s not like he has a choice.  Nevertheless, the news helped support positive risk sentiment.

EURUSD continued to consolidate gains above 1.1900, with prices underpinned by optimism that a vaccine will spark a global economic rebound.  Weak Eurozone Consumer, and Industrial Confidence data helped to cap gains at 1.1932.

GBPUSD is sluggish and is trading just above the bottom of its 1.3317-1.3380 range because of reports that the EU and UK remain far apart on the remaining critical Brexit issues.  Prime Minister Boris Johnson said as much today.  EU Chief Negotiator Michel Barnier is in London today for more talks.

USDJPY traded in a 103.92-104.27 range and is hovering around 104.12. Tokyo CPI fell 0.7% y/y in November, the largest drop since May 2012.

AUDUSD and NZDUSD continued to grind higher, underpinned by hopes for a global economic rebound.  Traders conveniently ignored China’s new hostile trade actions.  Beijing slapped tariffs on imports of Australian wine of up to 212%.

The news follows on the heels of China’s refusal to allow the unloading of Australia coal at various ports, citing environmental quality concerns.  The actions are because China is annoyed at Australia’s supposed anti-China actions.

Oil prices remain steady and are 7% higher than they were on Monday.  Prices are supported by a positive global growth outlook and expectations that Opec will leave production levels unchanged at this weekend’s meeting.

USDCAD dropped from a peak of 1.3023 to 1.2986 in early NY trading, with month-end rebalancing flows playing a large role, and getting an assist from firm crude prices.  USDCAD is probing support in the 1.2985-90 area, with various support levels layered down to the 1.2940-50 zone.

There are not any Canadian or US economic reports today.  US stock markets close early (1:00 pm).

USDCAD Technicals:   The intraday USDCAD technicals are  unchanged again.  They are bearish below 1.3030, looking for a break of 1.2985, extending losses to 1.2950.  A  decisive breech of 1.2950 opens the door to  a test of support at 1.2735. For today, USDCAD support is at 1.2985 and 1.2950.  Resistance is at 1.3030 and 1.3060 .Today’s Range 1.2950-1.3020

Chart: USDCAD 4 hour

 Source:  Saxo Bank Source:  Saxo Bank

FX open (6:00 am EDT) High, Low, and previous close

Source:  Saxo Bank