Listen to the latest market mood for the USDCAD pair.
Risk tone sours overnight
Asian equity markets were broadly lower overnight with the Nikkei down -0.86%, and the Shanghai Composite down -1.11%. This helped strengthen the dollar and the Dollar Index pushed back above 100.50 overnight.
If the risk tone sours further as we head into the European session then we can expect CAD weakness as oil prices will start to drop in line with equities. Initial trials of a drug called Ramdesivir by Gilead is reported to have failed its first stage of clinical trials. There had been high hopes for a treatment from Gilead, so expect this negative COVID 19 news to weigh on risk sentiment during the European session.
- Therefore, expect USDCAD buyers on pullbacks.
- We expect this outlook to play out over the next 4-8 hours.
- The main risk to this outlook remains to be any positive coronavirus news which would send the market back into a risk on mood. Also, any positive news for oil would strength CAD and invalidate this outlook.