Home Daily Commentaries Loonie strengthens following a rebound in crude oil

Loonie strengthens following a rebound in crude oil

Daily Currency Update

CAD - Canadian DollarThe Loonie was in a rally yesterday, pushing the USD/CAD pair to the lowest point in three days (1.3206), representing a fall of 0.13 percent. The key driver was a rebound in crude oil, which stabilized for the first time this week after Saudi Arabia signaled that it's taking steps to support the market. Furthermore, underlining the broader risks to supply, the U.S. military warned that Iranian naval forces might increase "aggressive actions" against American and allied commercial ships. This morning, on the economic release side, the net change in employment in July came in at -24.2 k, while the expected number was +15 k. Additionally, the unemployment rate came in at 5.7 percent, higher than the expected 5.5 percent. This harmful economic data pushed the USD/CAD higher towards 1.3275; however, it came back down to 1.3214 following another spike in crude oil a few moments ago. According to Statistics Canada, the unemployment rate increased by 0.2 percentage points to 5.7 percent as more people searched for work. Compared with July 2018, employment was up by 353,000 (+1.9 percent), driven by gains in full-time work (+326,000 or +2.2 percent). Over the same period, hours worked increased by 0.7 percent.

Key Movers

The U.K. economy unexpectedly shrank, pushing the GDP 0.2 percent lower, delivering a blow to newly installed Prime Minister Boris Johnson. At the same time, Boris Johnson said there is still time to renegotiate the Brexit divorce deal and urged bloc leaders to show "common sense" and rewrite the accord. Officials in Brussels disagree and are so far not willing to reopen the agreement. German exports registered their steepest annual decline in three years in June. According to Destatis Statistisches Bundesamt, the foreign trade balance showed a surplus of 16.8 billion Euros in June 2019, while the expected number was 19.5 billion Euros. In Europe as well, Italian Deputy Prime Minister Matteo Salvini said that the government no longer held a majority in parliament and called for "swift" elections, The yield premium of Italian bonds over German securities, a key gauge of risk, climbed toward the widest level in a month on Thursday. Australia's dollar climbed for a second day after Reserve Bank Governor Philip Lowe signaled the worst might be over for the economy. Lowe added that there are signs Australia's economy, "…may have reached a gentle turning point," adding that quarterly GDP growth is expected to strengthen gradually. The AUD/USD pair trades at 0.6815 representing a 0.15 percent increase this morning. Meanwhile, Reserve Bank of New Zealand Governor Adrian Orr said the exchange rate is at a competitive level on average; the NZD/USD trades at 0.6495, a 0.20 percent increase.

Expected Ranges

  • USD/CAD: 1.3191 - 1.3265 ▼
  • EUR/CAD: 1.4755 - 1.4858 ▲
  • GBP/CAD: 1.5910 - 1.6080 ▼
  • AUD/CAD: 0.8969 - 0.9050 ▼
  • NZD/CAD: 0.8546 - 0.8620 ▲