USD / CAD reversal from 1.3390 extends to levels close to 1.3200

  • USD / CAD accelerates its downtrend to lows of 1.3230.
  • The Canadian dollar appreciates as oil prices rebound.
  • USD / CAD: The underperforming Canadian dollar will continue – MUFG.

The US dollar is falling sharply against its Canadian counterpart on Monday, accelerating its reversal from last week’s high near 1.3400 to hit intraday lows at 1.3230 so far.

Canadian dollar appreciates as oil prices rebound

The loonie has not been affected by the general strength of the US dollar, with the USD / CAD depreciating for the second day in a row. The 2% rebound in oil prices and the reversal of long dollar positions ahead of US Election Day are weighing on the USD.

Beyond that, market sentiment improved somewhat on Monday after the strong risk aversion sentiment seen last week. Major stock indexes are making substantial gains and oil prices have appreciated more than $ 2, as positive data from Chinese factories and American manufacturing activity have offset concerns about the spread of the coronavirus.

However, in a somewhat longer perspective, crude prices remain at a month-long lows after having depreciated more than 10% over the past two weeks amid fears that the second wave of lockdowns will sink global demand. This is expected to be a burden on the Canadian dollar.

USD / CAD: Canadian Dollar Underperformance Will Continue – MUFG

The MUFG Currency Analysis Team However, he continues to have a bearish outlook on CAD: “Annual and semi-annual CAD is the second worst performing G10 currency. As we’ve said here before, the aggressive stance of the BoC is one reason for us to expect the CAD to continue to underperform in the G10 space. The expansion of the BoC’s balance sheet since the COVID crisis started amounts to 20% of GDP, compared to 14% for the Fed in the US and around 17% for the ECB. ”

Credits: Forex Street

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