The US dollar is up against the Canadian dollar on Tuesday morning amid a more risk-off tone in markets that saw rising demand for the dollar.
A warning from Apple that the coronavirus will mean it misses its sales target has renewed fears of a China-induced slowdown.
USD/CAD was higher by 29 pips (+0.22%) to 1.3265 with a daily range of 1.323 to 1.326 as of 9.30am GMT. Having drifted lower on Monday the currency pair is now making new highs for the week above 0.325. Today’s gains leave a weekly return of +0.10%.
USD/CAD exchange rate is rebounding off monthly lows
The pair is snapping two days of losses to turn higher amid deteriorating risk sentiment. Traders in the United States will return from a three-day weekend to news that major tech companies including Apple, Tesla and Alibaba are warning the coronavirus will affect current-quarter results.
Heightened coronavirus fears are again weighing on the commodity-linked Canadian dollar. Oil prices are unwinding some the gains made last week as fears grow that the closure of manufacturing plants, disruption of supply chains and travel restrictions will mean lower corporate profits which could in turn further curtail fuel demand.
The US dollar
The markets are beginning to look ahead to the release of FOMC minutes tomorrow, although expectations are somewhat limited. Given that the minutes are for a meeting that pre-dates Federal Reserve Chair Powell’s testimony on Capitol Hill, they could be a little stale. However, they should include an update on the policy review currently being conducted. It’s possible that Fed decides to replace its 2% inflation target with something vaguer, or perhaps more variable. One option touted by some is the use of an average of previous months/years. Given that inflation is consistently below the 2% target, this would be a dovish message.
Today sees the release of manufacturing and housing data. The NAHB Housing Market index is expected to remain steady at 75 while the New York Empire State Manufacturing index is expected to rise slightly to 5 in February from 4.8 previously.