The Canadian dollar has posted strong gains on Tuesday. In the North American session, USD/CAD is trading at 1.3124, down 0.69% on the day. The pair has dropped 1.4% so far this week, erasing all of last the previous week’s gains. On the fundamental front, it’s a very light schedule on Election Day in the United States. In the US, Factory Orders improved to 1.1%, up from 0.7% beforehand. There are no Canadian events on the schedule.
All eyes on US election
It’s election day in the US, in what can be characterized as one of the most polarizing election campaigns ever. The election is taking place at a time when Covid-19 is rampant and the US economy is trying to recover from a sharp economic downturn. Add to this mix the specter of a contested election, and it’s easy to see why there is plenty of tension and apprehension in the air. If the results of the vote for president are close, we could well see a demand for a recount by the losing side, and this political uncertainty could result in significant volatility in the financial markets.
Ahead of the election results, the US dollar is broadly lower against the G-10 currencies, with the exception of the Japanese yen. This is due to expectations in the market of a “blue sweep”, in which the Democrats take control of the White House, the House of Representatives and the Senate. However, it is far from a given that this is how the election results will play out, so the US dollar could reverse directions and move higher if Donald Trump wins the presidency or the Senate remains under the control of the Republicans.
- USD/CAD is on a downward trend and has tested support at 1.3109 in the North American session. The next support line is at 1.3076
- There is resistance at 1.3204, followed by resistance at 1.3266
- USD/CAD has broken below the 50-day MA, which is a sign of a downward trend for the pair
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