Gold 1796, Aussie's Virus Return
The overarching reason for the latest round of US dollar weakness is risk appetite. The latest jolt came from China, where the Shanghai Composite gained 13% over the same stretch. Money may be returning to emerging markets more generally as sentiment improves.
Moreover, the US could be suffering from the effects of rising virus cases domestically. Every day where cases remain elevated in the US compared to other developed markets, it loses attractiveness – something we've been highlighting for awhile.
The dollar managed to recoup some losses Monday on a jump in the ISM non-manufacturing survey to 57.1 from 45.4, but is now under fresh pressure.An initial retreat in oil has added to CAD's losses, which were built from yesterday's BoC survey. USDCAD may eye 1.3610 on deepening risk aversion, while EURCAD could retest 1.5420. Gold nears 1800, showing no sign of breaking below its medium term trendline support, while EURUSD risks correcting to 1.1240s.
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