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November 9, 2020
- Media trumpeting a “kinder, gentler” world under President Biden
- Global equities and US futures surge on Vaccine news
- US dollar slides as Biden win confirmed-Its January 2020 for USDCAD
FX Ranges at a Glance
Source: IFXA Ltd/RP
FX Recap and Outlook If media reports are to be believed, the outlook for the world hasn’t been so rosy since Harry Potter took down Voldemort. News that “Sleepy Joe” Biden prevailed (barely) over Donald Trump triggered a torrent of outrage in the losing camp, on a scale not seen since Hillary Clinton lost in 2016. Or in other words, a normal US election.
It seems expectations for more diplomatic rhetoric from the White House is good for business.
Equity futures soared after drug-maker Pfizer said early vaccine data suggests a 90% effective rate. DJIA Futures rallied 5.45% in early NY trading. European bourses climbed a similar amount, while Asia equity indexes closed with gains.
So now what? The focus will drift back to central bank policies and actions, eventually, with concerns about the economic impact of COVID-19 round two, tempering enthusiasm.
EURUSD traded in a 1.1861-1.1906 range, garnering some support from hopes for a thaw in frosty EU/US trade relations, and with the World Trade Organisation as well. Another drop in USDCNY is also supporting prices. EURUSD technicals suggest the latest rally is running out of steam, leaving the single currency vulnerable to a retest of the 1.1790 area.
GBPUSD is in the middle of its overnight 1.3122-1.3198 range on the back of improved risk sentiment from the Biden victory. Rising concerns that the EU and UK will not come to a trade agreement may limit gains. Prime Minister Boris Johnson’s office issued a statement on Saturday which said in part: “The prime minister set out that, while some progress had been made in recent discussions, significant differences remain in a number of areas, including the so-called level playing field and fish.” Talks continue today.
NZDUSD outperformed its AUDUSD cousin, ahead of tomorrow’s RBNZ meeting. Analysts expect that the RBNZ will leave rates unchanged but continue to do the ground-work for negative rates in 2021.
USDCAD traded in a 1.3004-1.3066 range overnight then dropped to 1.2939in early NY trading. Prices were weighed down by the 10.5%surge in oil prices, today, even though President-elect Biden is rabidly opposed to Alberta’s oilsands. He also said he would cancel the Keystone XL pipeline, which, in the very least, should evict the Canadian dollar from the “petro-currency club.”
Wall Street and US election chatter will continue to be the trading focus today. The US and Canadian data calendars are empty.
USDCAD Technicals: The short term and intraday technicals are bearish, leaving 1.2950 as the last line of defence, preventing a steeper drop to 1.2690. The decisive break of 1.3361, the 61.8% Fibonacci retracement level of the September 2017-March 2020 range targets the 76.4% level at 1.2695. For today, USDCAD support is at 1.2930 and 1.2880. Resistance is at 1.3010 and 1.3030. Today’s Range 1.2930-1.3010.
Chart: USDCAD daily
Source: Saxo Bank
FX open (6:00 am EDT) High, Low, and previous close
Source: Saxo Bank