(28 AUGUST 2020)DAILY MARKET BRIEF 2:The USDCAD slips below the 1.31
The weak US dollar continues fueling gains in EURUSD, GBPUSD and AUDUSD.
The EURUSD advanced to 1.19, and Cable hit a fresh post-pandemic high at 1.3284. Though we consider both levels overstretched due to rising concerns over the spreading pandemic in Europe and unresolved Brexit tensions months into the final divorce bill, we do not rule out the possibility of further advance as investors seem unwilling to return to the US dollar soon.
The AUDUSD is preparing to test the 0.73 resistance on the back of a broadly soft US dollar, iron ore prices progressing to year-high levels and data showing a faster economic recovery in China, Australia’s biggest trading partner.
WTI crude eased below $43 per barrel as Hurricane Laura lost strength after hitting Louisiana, suggesting that Texas refineries will be avoiding the worst of the storm. There is a stronger toppish feeling near the current levels, which point at a rising possibility of a deeper downside correction towards $42.30 pb (50-day moving average), then to $40 pb.
The USDCAD slips below the 1.31 mark for the first time since January. The weak US dollar and steady oil prices continue giving support to the Loonie bulls. Due today, the Canadian GDP figures could show some improvement in June and encourage the pair to progress towards our medium term 1.30 target. But a potential downside correction in oil prices could limit the USDCAD’s decline near this level.
