Home Daily Commentaries US dollar demand rises ahead of Fed meeting

US dollar demand rises ahead of Fed meeting

Daily Currency Update

CAD - Canadian DollarDemand for the US dollar was up overnight and this morning heading into the Federal Reserve’s first meeting since President Joseph Biden took office. Despite reports from the International Monetary Fund yesterday that global growth would increase 5.5%, the Canadian dollar was generally suppressed throughout the day yesterday. While we saw some volatility between EURCAD, the CAD was range bound after USDCAD fell below 1.27 yesterday morning. It wasn’t until European traders entered the market that demand increased for USD and pushed USDCAD above 1.28 early this morning.

Key Movers

Great British pound started yesterday on the backfoot, falling to 1.3612 versus the US dollar and 1.1231 against the euro, but recovered against these lows over the day. The UK CBI came in 50 points below the indicator and demonstrated a sharp contraction. Not even Prime Minister Boris Johnson’s announcement that the UK reached 100,000 COVID-19 related deaths could stall GBP demand.The Australian dollar edged upward overnight after a largely subdued domestic session saw it test lows below 0.7680. The AUD drifted below 0.77 US cents through the afternoon after Asian markets came under pressure following commentary from the People's Bank of China. A PBoC advisor warned excessively low borrowing cost and an abundance of liquidity was fueling a possible market bubble, forcing risk assets and equities lower as the Hang Seng, S&P 500 and ASX all edged lower. Having touched intraday lows at 0.7670, the AUD found support and surged toward intraday highs at 0.7750 after the IMF upgraded its growth forecast for 2021.

Expected Ranges

  • EUR/CAD: 1.542 - 1.546 ▼
  • GBP/CAD: 1.743 - 1.751 ▼
  • AUD/CAD: 0.980 - 0.984 ▲
  • USD/CAD: 1.268 - 1.281 ▼