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December 14, 2020
- Risk-on sentiment returns on Brexit talk extension
- GBPUSD soars after Eu” Barnier says some progress in Brexit talks.
- US dollar opens with losses across the board
FX Ranges at a Glance:
Source: IFXA Ltd/RP
FX Recap and Outlook: FX markets started the week in a good mood, and the US dollar paid the price. The FDA officially approved Pfizer’s COVID-19 vaccine, and the company is shipping product. The US Senate approved a one-week, “stop-gap” spending bill, and the Electoral College will formally confirm Joe Biden as the 46th President. Even better, the long-awaited COVID-19 Relief bill is expected to be introduced today.
Asia equity indexes closed with modest gains (except the Hang Seng). The German DAX index is up 1.19% leading European bourses and US equity futures higher. WTI oil is up 1.16% while Gold lost 0.84%.
Traders ignored coronavirus news. COVID-19 death tolls are at record highs in Europe. Germany is going into a “hard” lockdown next week. All non-essential retailers, services, and schools are closed until January 10. New COVID-19 cases in the US totaled 415, 722.
GBPUSD gapped higher at the Asia open rising from Friday’s closing level of 1.3219 to 1.3372, following the weekend news that UK Prime Minister Boris Johnson and EU Commission President Ursula von der Leyden agreed to continue Brexit talks. GBPUSD slipped to 1.3323, just before Europe opened. EU Chief Negotiator Michel Barnier’s comment that “progress was being made,” which included concessions on fisheries and “level playing field.” GBPUSD soared to 1.3436 and is hovering just below that level in NY trading.
EURUSD rallied alongside GBPUSD, but not to the same extent. The single currency climbed to 1.2159 from 1.2113, underpinned by positive risk sentiment. Eurozone Industrial Production rose 2.1% m/m in October. Traders did not care.
USDJPY dropped to 103.71 from 104.10 on the back of rising Treasury yields. US 10-year Treasury yield soared 5.7% since Friday morning, rising to 0.926%. Industrial Production and Capacity Utilization data were better than expected.
AUDUSD and NZDUSD price action mirrored risk sentiment and both currency pairs are near the top of their overnight ranges
USDCAD traded in a narrow 1.2745-1.2762 band due to the positive risk sentiment, then dropped further in NY trading. News that Canada has received COVID-19 vaccines may have helped, even though it is only enough for 0.04% of the population.
The economic data calendars are empty. Today’s focus will be on Brexit, US COVID-Relief, and the electoral college vote.
USDCAD Technicals: The USDCAD technicals are bearish. The downtrend channel from November 23 suggests 1.2670-1.2840 price action. For today, USDCAD support is at 1.2700 and 1.2670. Resistance is at 1.2760 and 1.2790. Today’s Range 1.2670-1.2760
Chart: USDCAD 4 hour
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank