- Japan’s Nikkei tanked in Asian trade as Tokyo readies to tighten covid restrictions.
- Resilient oil prices and vaccine optimism could underpin the cyclically-sensitive Canadian Dollar.
- USD/CAD set to extend downtrend
Meanwhile Australia’s ASX 200 rallied 0.51% on reports the Australian Prudential Regulation Authority is toying with a cap on bank dividend pay outs.
Japan’s Nikkei 225 tanked 1.1% as Tokyo readies to tighten lockdown restriction after recording 493 new daily cases – a record.
The safe haven US Dollar extended losses versus its major peers. The Japanese Yen nudged marginally higher.
Vaccine Optimism, Resilient Oil Prices Underpin CAD
a second set of upbeat covid vaccine results combined with resilient crude oil prices could push the CAD higher versus the USD.
Moderna’s vaccine was found to be 94.5% effective in clinical trials Pfizer and BioNTech was just marginally lower The news has boosted risk sentiment & demand for riskier assets.to the news also underpins crude oil prices amid rising demand concerns as several US states tighten restrictions.
Although correlation is not causation, the positive relationship between oil prices and the Canadian Dollar is certainly one to note. After all, Canada’s most valuable export is crude oil, accounting for $98.5 billion of trade in 2019.
Inflation Data Eyed
Looking ahead inflation data could lift the Canadian Dollar further versus Core and headline inflation rates are expected to decline-0.1% lower in October.
Meanwhile, an upbeat reading could minimise the chances of further easing from the Bank of Canada. Previously BoC Governor Tiff Macklem has voiced his concerns regarding the impact of further monetary easing well known.
With this in mind, investors could cheer a premium on the Canadian Dollar if upcoming economic data shows the nation’s recovery is on track.