The US dollar has an exchange rate of 1.33 against the Canadian dollar the day before the presidential election. With a YTD return of 2.49%, traders will have to wait and see if the pair will continue having a bullish trend as the week progresses.
With a 52-week range between 1.29 and 1.46, market volatility is anticipated until reactions to the election become clearer. If Trump is re-elected, civil unrest will ensue across the US putting the Canadian dollar in an unsafe position.
At the end of October, the rise of USD/CAD exchange rates brought the Relative Strength Index (RSI) to 59.34 which is “about half-way to over-bought status but it is not a sell signal.” This month traders may be pushed towards currencies outside North America due to political instability in the United States.
Another factor contributing to the pair’s fluctuation and constant market attention is Canada’s employment statistics; CAD traders will benefit if the unemployment rate continues to rise. From 9% in September, the unemployment rate was forecasted to increase to 9.7% in October. After 378, 200 jobs were added to the economy, there is hope for the percentage to continue moving in an upwards trend moving into November.
The second wave of the pandemic and election results place stress on USD/CAD but traders will still see gains of 1.5% as risk-aversion returns this week. Technical support sits at 1.31 giving the pair a safety net as Q4 results continue to worry investors.
“Bulls are targeting September months high of 1.34 while also concentrating on the October peak close to 1.33 and the 1.34 threshold and immediate upside barriers” according to FX Street.
With a daily change of -0.20%, the USD/CAD exchange rate could produce substantial returns if traders keep a level head moving into a week where turbulence is greatly anticipated.
By Surina Nath