Home Daily Commentaries The Loonie falls to four-year and three-month low amid further rate speculation.

The Loonie falls to four-year and three-month low amid further rate speculation.

Daily Currency Update

CAD - Canadian DollarBank of Canada Governor Stephen Poloz will join Finance Minister Bill Morneau at a press conference at 11:15 a.m. EST. Morneau is expected to release a stimulus package of about 1 percent of GDP. Meanwhile, Poloz already announced an emergency half-percentage-point cut to the bank's benchmark interest rate last Friday. The USD/CAD pair is already trading at 1.4462 at this moment (and it is increasing quickly). If it reaches 1.4691, it would reach a 17-year high (the weakest level for the Loonie in 17 years). The bad news for the Loonie doesn't stop there; the Loonie is also tumbling following lower crude oil prices (11 percent lower from yesterday close) and the weakest Canadian equity market in years. However, Canadian Prime Minister Justin Trudeau is expected to unveil a fiscal stimulus package worth 1 percent of GDP to help the Canadian economy avoid an imminent economic slowdown. The U.S dollar is increasing quickly at this moment because every crisis boosts demand for cash, and the U.S. dollar is accepted all around the world. Global market participants demand U.S. dollars to keep businesses running. The Fed in the U.S. already did its job by pumping more liquidity into the money markets, so there is less pressure on money markets for funding right now.

Key Movers

The U.S dollar extends gains, increasing against the Euro by 1 percent. The EUR/USD pair trades at 1.0885 at the time of this writing. The U.S. dollar continued its advance, pushing broad measures of its value to three-year highs, as global equity futures pointed to losses. The British Pound fell to the lowest since 1985. The U.S. dollar funding issues were eased after the Fed unleashed two emergency lending programs on Tuesday. Market participants around the world continue accumulating the Greenback amid increasing concerns over bank fund costs in a sharp economic downturn. For instance, European banks took $112 billion from the Fed, the most since the global financial crisis in 2008. There was an effort with the ECB to keep U.S. dollars flowing in European economies (outside of the U.S.) and support international funding markets. This financial help followed the cut of the Fed Funds rate to a range of 0 to 0.25 percent. This week's series of repo injections is supporting lending markets in North American money markets.

Expected Ranges

  • USD/CAD: 1.4332 - 1.4690 ▲
  • EUR/CAD: 1.5601 - 1.5817 ▲
  • GBP/CAD: 1.6926 - 1.7200 ▼
  • AUD/CAD: 0.8433 - 0.8581 ▼
  • NZD/CAD: 0.8372 - 0.8440 ▼