CAD makes small gains on rising oil and steady USD
Daily Currency Update
The Canadian dollar made limited gains amid rising oil prices and a steady US dollar. Oil broke a new yearly high of $92/barrel today. The supply deficit could grow even larger if demand from China starts to pick up. In Canadian data, housing starts were flat in August reporting at 253,000 versus the 255,000 seen in July. This is also below the expected 257,000 housing starts. The Industrial Product Price Index, which shows prices of products manufactured in Canada, rose 1.3% in August. This was better than the 0.5% forecasted figure and the previous rise of 0.4%. The Raw Materials Price Index (RMPI), which shows the prices of raw materials purchased by manufacturers, increased by 3% in August with crude energy products leading the increase. Excluding crude energy, the RMPI rose just 0.2% month-over-month.Key Movers
The US dollar has been trading in narrow ranges today ahead of several central bank meetings this week. The US dollar index (DXY) was above 105 but struggled to make new gains this morning. With no high-tier data releases today, the market was holding tight ahead of the Federal Reserve’s policy decision on Wednesday. The USD is likely to trade flat ahead of Fed Chair Jerome Powell’s speech. In data news, the National Association of Home Builders (NAHB) Housing Market Index was reported at 45. This was below the forecast and previous level of 50. High mortgage rates above 7% seem to be weighing on builder confidence as these sentiment levels drop below the break-even measure of 50 for the first time since April.The EUR/USD pair is holding above the 1.0650 mark after last week’s bearish action. It is going to be a relatively quiet week for Eurozone data and events with the implications of last week’s hike and subsequent decline for the EUR still visible in the market.
The GBP/USD briefly rose above 1.24 this morning but continues to remain soft during the current trading session. Markets are expecting another rate hike from the Bank of England (BoE) on Thursday with a 20% chance of a pause.
China’s central bank met with foreign institutions including JP Morgan, HSBC, Deutsche Bank, and Tesla today as China seeks to attract foreign investment to support its recovery. Foreign investment into China has dropped 5.1% year-over-year so far in 2023.
Expected Ranges
- EUR/CAD: 1.4369 - 1.4429 ▼
- GBP/CAD: 1.6689 - 1.6765 ▼
- AUD/CAD: 0.8668 - 0.8713 ▼
- USD/CAD: 1.3472 - 1.3529 ▼