CAD lags amid USD setbacks
Daily Currency Update
Demand for Canadian dollars lagged this morning despite gains in oil. Oil was up 2.31% today to 77.79 at the time of writing. The Bank of Canada (BoC) is expected to keep interest rates unchanged until at least the first quarter of 2024. Analysts at Danske bank is taking a bullish view on the USD/CAD pair over the next 3-12 months. Although further USD setbacks are expected in the short term, they are not expected to affect the CAD as much as other major currencies that are more cyclically sensitive. The Canadian high household debt and the burden of high consumer rates are keeping the market mood negative towards the CAD for the time being.Key Movers
The US Dollar Index (DXY) was down 0.25% today to the 103.558 region leading the DXY to its lowest level since August. This supports the market belief that US rates have peaked, and eyes will now be on the Federal Reserve potentially beginning to cut interest rates. The Conference Board’s Leading Economic Index (LEI), which provides an early indication of significant turning points in the business cycle and where the economy is heading in the near term, fell -0.8% month-over-month, which was worse than the forecasted -0.5% drop and the previous -0.7%. The LEI trajectory remains negative, though the 3.3% contraction in the last six months is smaller than the previous six-month period from October 2022 to April 2023 which saw a -4.5% drop.In Eurozone news, the German Producer Price Index (PPI) month-over-month came in at 0.1%. This was higher than the forecasted 0% change and the previous -0.2% dip.
Expected Ranges
- EUR/CAD: 1.4952 - 1.5039 ▲
- GBP/CAD: 1.7070 - 1.7171 ▲
- AUD/CAD: 0.8913 - 0.8997 ▲
- USD/CAD: 1.3689 - 1.37494 ▲