• Commodity currencies AUD and NZD outpace others.
  • BoC ahead, CAD under pressure over global risk aversion.
  • USD/CAD might check the monthly high.

Asia-Pacific session saw the risk assets making a comeback after registering early losses. Pro-risk currencies like Australian and New Zealand Dollars performed better than the rest as investors paid a premium for countries with low COVID-19 cases.

Australia’s ASX 200 index went up by 0.1 Percent, and China’s CSI Index made a gain of 1.1 Percent. The rise in the number of coronavirus cases dragged the Euro as many countries in the region had to increase various restrictions to combat the pandemic.

Gold and silver were slightly higher while US 10-year Treasuries yield continued at 0.76 Percent.

Canadian Dollar Outlook

The CAD traders will eye EIA crude oil inventories and the Bank of Canada’s interest decisions.

The difficult market mood might work against the CAD, and the loonie might suffer loses against the Japanese Yen and the US dollar.

The coronavirus cases have more than doubled in Canada in the last 30 days, similar to the record rise in the European region. Canada’s chief public health officer Theresa Tam warned that the number of hospitalization and deaths could spike after the recent surge in the coronavirus cases.

Several Canadian provinces have recently increased the restrictions as the pandemic cases spiked and it has affected the mobility in the country – pulling down after peaking in September. The increased restrictions have triggered concerns that the current economic recovery might stagnate.

Nevertheless, the Canadian central bank might raise their economic growth projections from the earlier estimates in their upcoming meeting. Governor Tiff Macklem had earlier said that the economy might require a bold policy response; still, the private and public sector should remember that any such action will make the economic and financial system more vulnerable during a future shock.

Market participants sense that the central bank might not be liberal in its approach to alternative policy measures due to their potential impact later on. They would prefer not to take aggressive action unless necessary.

The CAD will be under pressure, even without a dovish stance from the central bank, as US elections, and the pandemic worries make pro-risk currencies less attractive.