USD/CAD continues to crumble. What’s next

USD/CAD down 220 pips on the day

The massive move lower in USD/CAD has extended to a session low. The pair is down 219 pips to 1.3766, which virtually ensures a close below the breakdown level of 1.3856.

One of the unsung factors in the drop today is the earnings report from Scotiabank. All the major Canadian banks report this week and they were first out of the blocks.

The company earmarked $1.85B for loan losses in the quarter and said it will provision about the same in the coming quarter. That was below consensus estimates and well below what was feared. Shares of the company are up nearly 8% and other Canadian banks are following along, assuming that consumer, corporate and residential debt will default at manageable rates. Within the company’s results, it was the international segment (mostly LatAm) that was a larger drag than domestically.

As for USD/CAD, there is now little support until 1.3500.

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