FX and equity markets experienced a bit of chop during the debate between U.S. President Trump and contender Joe Biden,
The Canadian dollar sank, alongside the rest of the G-10 major currencies. USD/CAD touched $1.3419, after closing at $1.3390. The move didn’t last, and the Canadian dollar opened unchanged compared to Tuesday’s closing level, the best performing currency overnight.
EUR/USD traded lower, falling from $1.1754 to $1.1694, on the back of both safe-haven demand for U.S. dollars and month end flows. Prices were also weighed down by dovish comments from European Central Bank President Christine Lagarde who hinted that the central bank may adopt U.S.-style inflation targeting. Traders were also concerned when German Chancellor Angela Merkel warned of a delay in the European Recovery Fund implementation. However, better than expected German August Retail Sales and September employment data provided a bit of support.
GBP/USD fell alongside EUR/USD, dropping from $1.2872 to $1.2807. The currency is under pressure from month-end portfolio rebalancing demand for U.S. dollars, however losses were slowed by progress on the E.U./U.K. trade negotiation front. The U.K. Guardian reports that Britain has offered concessions to the fishing rights issue. The U.K. is suggesting a three-year transition period for European fishing fleets, with decreasing quotas until 2024. Meanwhile, Bank of England Chief Economist Andy Haldane offered optimistic comments about the economy, saying markets were too negative.
USD/JPY traded erratically in a 105.45 to 105.80 range, hitting the top and bottom in Asia, then climbing to the peak again, in Europe and early New York trading. Month-end flows are underpinning the currency pair.
AUD/USD and NZD/USD bounced around during the Presidential debate.
Better than expected China Purchasing Managers’ Index data supported prices.
Canada July Gross Domestic Product data is due today. The forecast is for an increase of 3.0% m/m, which is the guidance issued by Stats Canada. Today’s U.S. data includes GDP and Chicago PMI.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians