(MENAFN- Baystreet.ca) The Canadian dollar is the only major G-10 currency to have weakened against the U.S. dollar in the past 24 hours. That could be due to an undercurrent of "sell North America" sentiment permeating FX markets, as the Mexican peso is also weaker. WTI oil prices were steady and not a factor for USD/CAD traders. The Canadian dollar appears to be well-correlated with U.S. equities. Wall Street closed with losses which supported USD/CAD.
Federal Finance Minister Bill Morneau is delivering a budget update today. Under the Liberal stewardship, the deficit exploded higher, rising from around $25 billion last year to over $300 billion today. The fact that the government cannot even table a budget is evidence that it has completely lost control of Canada's finances.
Although other G-10 countries are in a similar state, Canada is the only nation where the government deliberately sabotaged a significant economic sector, which in this case is the oil industry. The ballooning government deficit and the loss of oil-patch revenues suggests the Canadian dollar is vulnerable to further weakness.
Longer-term USD/CAD technicals also support a weaker Canadian dollar view. The USD/CAD uptrend from January is still intact while prices are above $1.3440. A move above the $1.3630 area targets $1.3795.
The Canadian dollar is not getting much support from crude oil prices. West Texas Intermediate continues to hover around the $40.00/barrel level. Production cuts by the Organization of the Petroleum Exporting Countries and the re-opening of global economies are underpinning prices on hopes for increased demand.
Unfortunately, the resurgence of coronavirus cases in the US suggests demand may be curtailed, in the short-term.
The US reported 60,000 new COVID-19 cases yesterday, another daily record. Some states that had started re-opening have reversed those steps, even though President Trump continues to say the higher number is due to more testing.
FX markets were choppy but directionless overnight. USD/JPY suffered from renewed safe-haven demand on the back of the U.S. coronavirus news.
Rahim Madhavji is the President of KnightsbridgeFX.com, a Canadian currency exchange that provides better rates than the banks to Canadians
Learn how KnightsbridgeFX can help you save up to 2% when buying or selling US dollars compared to your Canadian bank's rates – click here to compare bank rates
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