Canadian dollar flexes its new strength

Key Movers

GBP traded lower on Wednesday as Prime Minister Boris Johnson and European Commission President Ursula von der Leyen failed to make a breakthrough after a long dinner in Brussels. They agreed to extend talks to Sunday as “very large gaps remain between the two sides and it is unclear whether these can be bridged.” The prime minister insists he does not want to leave any route to a possible deal untested. However, there must be a concrete plan regarding the future of talks in place on Sunday. Lead negotiators Lord Frost and Michel Barnier are to reconvene in London on Thursday to discuss strategy and whether a concession is possible.In Australia, consumer confidence rose to a ten-year high, astounding when you consider the backdrop and a remarkable reflection of the optimism driving a 2021 recovery. With unemployment expected to improve throughout next year as the labor market normalizes, there is a sense the Royal Bank of Australia will be hard-pressed to maintain a neutral monetary policy program over the next 36 months. Expectations that the 2020 retracement will be unwound through 2021 and 2022 are amplifying calls for the RBA to amend forward guidance and consider raising rates before the current 3-year timeline. While we expect monetary policy will accommodate through the short term, when measured against the backdrop of other major central banks domestic optimism should help drive further AUD gains through next year. Attentions today remain with the broader risk narrative as Brexit and US fiscal stimulus negotiations dominate the docket. Having given up the overnight high the AUD now buys 0.7438 US cents. A consolidated above 0.7450 could open the door for another run-on resistance at 0.7490/0.75.