The US dollar is flat against the Canadian dollar on Tuesday morning as global traders take a breath after a tumultuous trading day on Monday that saw the Dow Jones Industrial average crash 1000 points in the worst daily drop on Wall Street in two years.
USD/CAD was lower by 6 pips (-0.0.03%) to 1.3288 with a daily range of 1.3245 to 1.3293 as of 9.30am GMT. Two early attempts to send USD/CAD above 1.33 failed, leaving the price to settle just lower. Weekly gains in the exchange rate stand at +0.44%.
CAD, mostly out of favour during Monday’s big sell-off across global stock markets
The US dollar was the preferred currency, as was the Japanese yen while Canadian government yields fell, and gold rallied as investors sought out havens.
There was no specific news to deter investors from holding Canadian assets other than a rising sense that the coronavirus crisis, if it worsens into a global pandemic will make a further rate cut from the Bank of Canada much more likely. The same can be said of the United States but the falling price of oil might make the need for action more urgent in Canada, where the export of oil makes a up a bigger part of the economy than it does for the United States.
The dollar
The trading across forex markets now is either ‘risk-off’ or ‘risk-on’ as it relates to the COVID-19 outbreak. The sentiment is a little improved on Tuesday thanks in part to some natural seller exhaustion but also some improved headlines.
That some Chinese provinces are cutting their virus emergency level is a sign, if the authorities are to be trusted, that the outbreak is coming under greater control inside China. Indeed this appeared to be the case for much of last week too, it is the spread of the coronavirus outside of China that was causing the greatest worry. With the virus spreading to parts of Europe, President Trump has seen fit to request funding of $2.5 billion to combat it in the United States.
