Gold once again went past the 2000 dollars mark as the US dollar weakness continued on its own troubles. The Treasury yields also struggled as the economy was on a back foot, and the fiscal impasse continues.
Gold prices benefitted from the revived US-China tensions – the latest is the Huawei issue. The Fed minutes due on Wednesday also prompted the gold buying.
CAD Pullback Continues
USD/CAD hasn’t been able to arrest the slide after the advances during the start of the year. The decline hasn’t lost momentum after going below the 1.3315 level, the March/June low. The fall in the pair might continue on the back of crowding behavior in the dollar.
The resignation of the Canada Finance Minister Bill Morneau, both from the ministry as well as from the parliament, failed to deter CAD bulls. The pair receded to a fresh monthly low, 1.3185 and might continue to give away the gains made from the January low of 1.2957.
The dollar index, indicative of the dollar value against a basket of currencies, had lost more than eight Percent from its April highs as the Federal Reserve supported the economy through asset purchases and lending facilities. The Federal Open Market Committee minutes would be released today and might reassure about a continued dovish policy stance in the future. The Fed has earlier vowed to increase their holdings of Treasury and agency mortgage-backed securities at least at the current pace.
The Canadian central bank is also pursuing a similar policy response to the recent economic downturn. Its governor Tiff Macklem and team had earlier declared they would continue the large-scale asset purchase program of at least five billion dollars a week. But, the provisions to the US Dollar liquidity swap lines might put pressure on the dollar.
The crowding behavior in the US dollar might persist even if the FOMC sounds continually dovish in the minutes released today, as the retail USD/CAD positions are net-long since May.
