- USD / CAD is back above 1.2900 amid a firmer US dollar.
- However, the CAD is outperforming most of its G10 counterparts on Tuesday, likely fueled by optimism from the US fiscal stimulus.
He USD / CAD has moved back north of 1.2900, just above which it is currently stabilizing, amid a widespread strengthening of the US dollar that has seen the dollar index (DXY) move north of the 90.70 level in recent trading . mainly driven by a safe haven offer amid concerns about the new mutant strain Covid-19 in the UK, as well as ongoing Brexit angst. The pair is currently trading higher by about 0.4% or just over 50 pips, although the CAD is actually one of the best performing currencies against the strengthening US dollar on Tuesday.
The success of the US stimulus alleviates the problems of the CAD
Tuesday should have been a difficult day for the loonie and to some extent it has been, with USD / CAD crossing above the 1.2900 level for only the second time since early December (after Monday’s strong rally by above 1.2950). This time around, the move above the 1.2900 level has a more sustainable feel and the test of Monday’s highs of 1.2950 looks likely.
But as noted, the CAD is actually one of the best performing G10 currencies as of Tuesday. The overnight confirmation that the US Congress had agreed and voted in favor of a $ 900 billion stimulus package is probably doing the Canadian dollar more favors than other G10 currencies, given the increased exposure of the Canadian economy to a US market that is about to get a good price. juices funded by the government. The ink has barely dried with the signing of US President Donald Trump on the new legislation, but loonie bulls may already be betting on a more favorable outlook for the Canadian economy in the first quarter of 2021, which they hope to dissuade an increasingly dovish BoC from easing its monetary policy. set more (such as an interest rate cut from 0.25% to 0.1%).
In terms of next week; The loonie is likely to pay close attention to the month-on-month GDP growth figures for October at 13:30 GMT on Wednesday and, to a lesser extent, the November building permit figures at 13: 30GMT on Christmas Eve. (Thursday). But the main factors to consider will be the global macro, that is, the updates of the pandemic (what happens with the new strain Covid-19 that is detected in the United Kingdom) and Brexit and how the dollar reacts to these. However, the CAD could continue to outperform AUD and NZD after the glow of the US stimulus.
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