USDCAD Rises as Canada’s Economy Contracts
The Canadian dollar is in troubled water due to a combination of free-falling oil prices and a GDP slump. The Bank of Canada kept interest rates unchanged at 0.25% last week and ramped up bond-purchase programs to mitigate the recession. The central bank also acknowledged heightened uncertainty and “significant and rapid contraction” of the economy.
The loonie could stay under pressure as upcoming retail and inflation figures are forecast to remain largely lackluster. The pair is currently in a sideways consolidation between 1.3800 and 1.4300. An upside breakout may resume the bullish trend.
USDCHF Rallies on Plans to Re-Open Business
The US dollar has acted as a sentiment gauge during this COVID-19 crisis, especially after the US became the epicenter. Considering the country’s record unemployment – 22 million claims in the past month, the administration’s plans to reopen the economy gave the reassurance that the worst might soon be behind them.
Despite doubts about relaxing confinement measures, the greenback reacted positively and may climb further should states gradually lift lockdowns. The dollar has been gathering momentum after breaking through 0.9850. A close above the triangle consolidation pattern (0.9800) could trigger an extended rally.
EURGBP Falls On Possible Brexit Delay
The euro has given up most of its March gains against the pound sterling amid the outbreak. Brexit has clearly taken the backseat and given major areas of divergence in trade and fishing rights. Expectations are that negotiations could last well beyond the end of the year. This would benefit the pound and extend its recovery across the board because the last thing markets want to see is a no-deal divorce in December. In the meantime, the euro is looking for support around 0.8650. A rebound would have 0.8860 as the immediate resistance level.
AUDNZD Switches On Risk-On Mode
Risky currencies like the Aussie and the Kiwi are making a comeback as risk appetite re-emerges across global markets. The Australian counterpart has taken the lead as data came out of China less than feared. The second-largest economy contracted 6.8% in the first quarter, though industrial output shed only 1.1%.
The Australian dollar may continue to recover as Asia-Pacific has passed the peak of the pandemic. The bullish breakout above the March high of 1.0530 has put the pair on course to 1.0850. In case of a retracement, 1.0400 would be the first line of defence.