Canadian Dollar Advances On U.S. Stimulus Hopes

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The Canadian dollar appreciated against its most major counterparts in the European session on Monday, as sentiment lifted up after the Trump Administration offered a $1.8 trillion coronavirus stimulus proposal and polls showed that Democratic presidential candidate Joe Biden held lead over Donald Trump in the upcoming Presidential election.

The package included checks to individuals and an extension of the Paycheck Protection Program and was up from the administration’s previous proposal of $1.6 trillion.

But House Speaker Nancy Pelosi rejected the proposal, saying that it was insufficient.

With the election just weeks away, investors are pricing in a Biden victory that could likely result in more stimulus.

The People’s Bank of China scrapped a requirement for banks to hold a reserve of yuan forward contracts.

The central bank move made it cheaper to short the Chinese currency.

The loonie climbed to 0.9466 against the aussie, from a low of 0.9496 hit at 12:15 am ET. The loonie is likely to find resistance around the 0.92 area.

The loonie reached 1.5493 against the euro, its highest level since September 8. Next key resistance for the loonie is likely seen around the 1.52 level.

Data from Destatis showed that German wholesale prices continued to decrease in September.

Wholesale prices fell 1.8 percent year-on-year in September but slower than the 2.2 percent decline posted in August. Prices have been falling since February.

The Canadian currency recovered to 1.3118 against the greenback and was steady thereafter. On the upside, immediate resistance for the loonie is found near the 1.30 level.

In contrast, the loonie held steady against the yen, after falling to 80.28 at 12:30 am ET. At Friday’s close, the pair was worth 80.49.

Data from the Bank of Japan showed that Japan producer prices fell 0.2 percent on month in September – missing expectations for a flat reading following the downwardly revised 0.1 percent increase in August.

On a yearly basis, producer prices sank 0.8 percent – again shy of expectations for a loss of 0.5 percent, which would have been unchanged from the August reading.

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