The Canadian dollar looks to be back on the rise once more after a recent sigh of relief from the market regarding the coronavirus occurred this week. The relief came after a breakthrough from Chinese researchers who highlighted that a treatment for the coronavirus has been found. This lifted the markets risk sentiment as optimism that the virus could be controlled increased. An increased oil price has also helped the Canadian dollar recovery. The Canadian dollar also awaits its labour market report tomorrow which could see the currency propel if the results are positive. Meanwhile GBP has faltered over concerns surrounding Brexit which has allowed CAD to rally over sterling.
CAD Rises on Increased Optimism That the Coronavirus Can Be Contained
The coronavirus outbreak has dominated headlines for several weeks as death tolls rise. The widespread panic that was caused saw the markets risk sentiment tumble, taking with it risk-sensitive currencies like the Canadian and Australian dollars. However, with reports from China notifying the world of a breakthrough in treatment for the virus, the markets optimism has increased. This has helped the Canadian dollar pull itself back up as support floods back into the currency in hopes that the virus can be contained. Further to this, the currency has been boosted from a recovery in oil prices as the risk-off sentiment begins to fade in the market, driving oil demand higher.
Jobs Data Released Later Today Will Determine Canada’s Next Step
Canada will receive its jobs data for January later today. The releases will include Canada’s unemployment rate, participation rate, average hourly wages and net change in employment for the month. The data is set to be released at 13:30. The numbers can be telling of the outlook for household confidence and spending as well as business investment, all of which are being closely monitored by rate setters for warning signals that the economy needs support. The BoC opened its door to rate cuts in its January meeting, but the market will likely expect more disappointment for them to get to push for QE.
CAD Edges Over GBP as the UK’s Concerns Grow With Brexit Trade Deal
Meanwhile, GBP has been falling over the course of the week as investors concerns grow regarding the deal that Britain will end up with in December. The UK is aiming for a deal like Canada, but investors worry that the UK may be too optimistic which could land them with a worse deal or no deal at all. As a result of the fears, GBP dropped, allowing the CAD to edge over it.
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