The Canadian Dollar is trading against the US Dollar at an exchange rate of 0.77 this morning, down -1.08 with a YTD return of -0.27. The pair’s open rate was 0.7877, similar to the previous close of 0.7881. CAD/USD day range will sit between 0.77 and 0.78, the 52-week range is estimated to move between 0.68 and 0.79.
After a turbulent week for the US politically, CAD has managed to gain some strength staying within the 7.80 support level. Since crashing below the 7.00 level when the pandemic hit last March, CAD/USD has moved in an upward trend, reaching the 7.60 level in September, and continues to have bearish growth in Q1 of this year.
Daily FX reported that “USD/CAD showed a limited reaction to a larger-than-expected decline in Canada Employment, and key market trends may continue to influence the exchange rate as the US Dollar still reflects an inverse relationship with investor confidence.”
There are many factors to why CAD is performing well, along with low employment rates, oil prices have also been increasing. The Bank of Canada noted that “a broad-based decline in the US exchange rate has continued to a further appreciation of the Canadian Dollar.”
It is possible for CAD/USD to shift away from the narrow range that the pair has been trapped in “but swings in risk appetite sway the change rate as the US Dollar still broadly reflects an inverse relationship with investor confidence.”
Whether the Canadian Dollar will rally in the next few weeks is dependent on the stability of American politics and the success of the COVID-19 vaccine distribution. As Canadian case numbers continue to rise and lockdown measures being extended, widespread distribution of the vaccine in North America should ease tension for traders’ as January progresses.
By Surina Nath