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USD/CAD - Canadian Dollar Ignores Low Crude Prices

Sep 15, 2020 (Baystreet.ca via COMTEX) --

The Canadian dollar inched higher overnight, following in the footsteps of gains in the commodity currency bloc and rising stock markets.

China data got the ball rolling. Retail sales rebounded 0.5% y/y in August, beating the forecast of 0%, and Industrial Production rose 5.6% y/y compared to 4.8% previously.

The news is more evidence that China's economic recovery is being stoked by domestic demand. Chinese stock markets rallied on the story as did Australia's ASX index. Japan's Nikkei closed with small losses.

The Australia dollar surged after the minutes of the Reserve Bank of Australia (RBA) meeting of September 1. The RBA noted that the "downturn had not been as severe as earlier expected, and recovery was underway in most of Australia." It also said that it "considered it likely that fiscal and monetary support would be required for some time given the outlook for the economy and the labour market." AUD/USD rallied on the conclusion of a stronger-than-expected economy and low rates for longer. NZD/USD climbed as well, getting a boost from the better than expected Chinese data.

The British pound was lively. GBP/USD dropped in early trading in Asia, then climbed steadily and opened at the session peak in Toronto. The U.K. government's Internal Markets Bill passed its first reading which led to GBP/USD dropping from $1.2855 to $1.2816. The bill increases the odds for a "no-deal Brexit." However, broad U.S. Dollar weakness on modestly improved risk sentiment squeezed short GBP/USD positions, and fueled gains to $1.2925 in Toronto. GBP/USD also got a lift from better than expected employment data, even though government job support initiatives skew the results.

EUR/USD attempted to break above resistance at 1.1900 but failed. Eurozone and German ZEW Survey results were better than forecast, which supported EUR/USD.

German Economic Sentiment was 77.4 (forecast 69.8), while Eurozone Economic sentiment was 73.9 compared to the forecast of 62.8. Rising global stock markets and expectations for a benign Federal Open Market Committee meeting tomorrow fueled EUR/USD demand.

Oil prices are consolidating near their recent lows after the Organization of the Petroleum Exporting Countries, and the International Energy Agency trimmed 2020 oil demand forecasts again. They said ongoing COVID-19 concerns would lower demand.

Canadian dollar traders ignored the news, but slumping oil prices are acting as a drag on gains.

Today's U.S. data includes Industrial Production, Capacity Utilization, and New York Empire State Manufacturing. Canada releases Manufacturing shipments data.

Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians

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