The Canadian dollar ticked lower due to a mild rebound in risk sentiment.
The major Asian equity indexes closed with small gains, which helped European sentiment. The German DAX index is up 2.59%, leading the major European bourses higher. U.S. Equity futures point to a strong open on Wall Street today.
A Financial Times article helped to spark the latest round of positive risk sentiment. It reported that an European Union/U.K. trade deal may be possible due to signs of progress. The two-sides meet this week to determine if enough progress has been made to bring "senior advisors" into the talks. However, it is not all sunshine and unicorns, as fishing rights, state aid, and the Irish border are hurdles.
Nevertheless, GBP/USD soared on the story, rising from $1.2753 to $1.2929 in early Toronto trading. The rally turned the short term-technicals bullish and is targeting further gains to 1.3000.
The GBP/USD rally undermined the U.S. dollar against the majors.
EUR/USD gains lagged those of sterling, but the single currency managed to climb to $1.1669 from $1.1616. Traders may have been reluctant to take EUR/USD much higher because numerous E.U. officials continue to chatter about concerns of the impact of the exchange rate on inflation. Some analysts fear the ECB could resort to FX intervention to stem gains.
USD/JPY slipped alongside the GBP/USD gains, in part due to lingering concerns about a "second-wave" coronavirus outbreak and EUR/JPY selling.
AUD/USD was in demand from the start of the Asia session.
Prices were supported by news that Westpac bank, amended its forecast that the Reserve Bank of Australia would cut rates on October 6.
The bank released that forecast of Thursday, but had a change of heart, and pushed back the rate cut until the November meeting. NZD/USD climbed alongside its antipodean cousin.
The Canadian dollar ignored last week’s political theater and stayed positively correlated to EURUSD direction. Since that direction was higher, USD/CAD inched lower. The USD/CAD technicals are bullish above $1.3220, and $1.3330, looking for further gains to $1.3550.
Today’s U.S. and Canadian economic data calendars are empty of top and second-tier reports. Traders will be cautious, watching Wall Street price action, while waiting for Tuesday’s debate between President Trump, and President wannabe Joe Biden.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
