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The Loonie awaits more signals amid strong crude oil and more dovishness from other commodity-driven countries

CAD - Canadian Dollar

The Loonie had a very positive session yesterday after crude oil WTI pushed higher, touching 62 US dollars a barrel. Crude oil has kept rising this morning, increasing by another 0.5 percent, amid signs of tightening supplies and fading worries over global economic growth. The expectations for stronger crude oil have advanced through sophisticated market participants, who are now increasing their price predictions for 2019.

This morning, however, the US dollar is not helping the Loonie. The mild strength in the US dollar is erasing some of yesterday’s gains for the Loonie.

Technically speaking, the USD/CAD pair has a strong resistance at 1.3340, which was tested yesterday. It also has a significant support at 1.3280. The trend in intraday charts is looking bearish (strong Loonie), but as long as the US dollar does not have a clear direction, it should be a quiet day for the Loonie.

Key Movers

It is critical to follow what other countries are doing in terms of their monetary policy. Canada, as well as other countries such as Australia, are commodity-driven economies. Is there room for the Bank of Canada to become more dovish? The Reserve Bank of Australia (RBA) said yesterday that the next move for rates is down. The RBA noted that risks to the outlook have increased and it has pledged to set monetary policy to support growth and achieve the inflation target over time, according to a statement from the Australian Central Bank. The cash rate target has been kept on hold at 1.5 percent.

Expected Ranges

USD/CAD: 1.3240 - 1.3365 ▲

CAD/EUR: 0.6681 - 0.6716 ▲

CAD/GBP: 0.5730 - 0.5779 ▲

CAD/AUD: 1.0601 - 1.0649 ▲

CAD/NZD: 1.1075 - 1.1147 ▲