- US Mid-term election still undecided
- Positive risk sentiment starting to fade
- US dollar firmed overnight but still below Monday’s opening levels
USDCAD snapshot 1.3498-02, overnight range 1.3478-1.3525, close 1.3491, WTI $90.59, Gold $1670.60
The Canadian dollar caught a bid yesterday and soared, but gave back some of those gains overnight.
USDCAD smashed below support in the 1.3440 zone on Tuesday and plunged to 1.3389 before rising into the NY close. The USDCAD retreat was due to a wave of US dollar selling pressure against the major G-10 currencies sparked by a steep US stock market rally.
The S&P 500 index climbed sharply during the day and closed with a 0.54% gain, well below its peak intraday level. Traders were hoping the US mid-term elections would see the Republicans gain control of the House and the Senate. If so, the Biden Administration would be hamstrung in passing new legislation, which equity markets like.
Alas, the early results showed both parties making inroads and none of them what was expected. The Democrats could flip the Senate while the Republicans will win the House, albeit with a smaller majority than expected.
Asia markets were more concerned about Chinese developments then US politics, at least initially. China reported another increase in Covid cases which dampened hopes that Xi Jinping’s “zero-tolerance covid” policies would be rescinded in the immediate future. In addition, Chinese October PPI data was weaker than September, underscoring concerns about slowing China growth.
European bourses are trading negatively while gold and oil prices are below their NY closing levels.
West Texas Intermediate continued to its slide from $93.80/b on Tuesday, reaching $87.16/b overnight. Prices are weighed down by API news that US crude inventories rose 5.6 million barrels in the week ending November 4 and fears of weaker crude demand from China.
EURUSD consolidated Tuesdays gains in a 1.0034-1.0073 overnight with direction dictated by risk sentiment around the US election results.
GBPUSD dropped from 1.1566 in Asia to 1.1421 in early NY. The negative Bank of England economic outlook and caution ahead of next week’s budget should leave the currency in a 1.1350-1.1550 range.
USDJPY traded in a 145.18-145.90 band, weighed down by broad US dollar weakness and bearish short term technical.
AUDUSD chopped about in a 0.6460-0.6521 range. Weak Chinese PPI data offset remarks from RBA Deputy Governor Michelle Bulloch who warned that further rate hikes were needed to cool inflation.
The Canadian and US data calendar is empty.
