Home Daily Commentaries Canadian dollar slides pressured by oil prices

Canadian dollar slides pressured by oil prices

Daily Currency Update

Following a dovish 50bps hike by the Bank of Canada yesterday, USD/CAD experienced a drop of 60-odd pips. Much of the gains by the Canadian dollar were surrendered during the Asian and European trading sessions today.  The pair is trading shy of the 1.37000 level.  The Canadian dollar is experiencing additional strain as oil prices plunged below $80 a barrel, its lowest point since Russia invaded Ukraine in late February. The tumbling cost of crude is largely attributed to fears about how a slowing economy will curb global energy demand.

Key Movers

The DXY (Dollar Index) held above 105.00, peaking at its daily high of 105.375 on Thursday, due to higher U.S. Treasury yields. Investors are weighing the possibility of a future Fed policy against the likelihood that higher interest rates could trigger a recession. The key question for investors and traders is whether inflation has peaked, which would give policymakers more room to deliver smaller interest-rate hikes over the coming months. The US Department of Labor's weekly data, published on Thursday, showed that there were 230,000 initial jobless claims in the week ending December 3. The most recent print of 226,000 was in line with market expectations and followed the previous week's revised figure of 225,000.

The EUR hovered around the 1.0500 mark against the USD. Investors today will be monitoring European Central Bank President Christine Lagarde's speech for additional inspiration. Christine Lagarde's speech will give clues about what the central bank is likely to do at its December policy meeting.

The outlook for the UK economy looks bleak as falling UK house prices add to recession worries. Easing of COVID-19 restrictions in China provides some optimism. GBP/USD is trading around the 1.2200 mark

Expected Ranges

  • EUR/CAD: 1.4395 - 1.4282 ▼
  • GBP/CAD: 1.6686 - 1.6581 ▼
  • AUD/CAD: 0.9195 - 0.9147 ▼
  • USD/CAD: 1.3687 - 1.3575 ▼