Daily Currency Update

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Canadian Housing Starts to Give the Loonie a Footing

CAD - Canadian Dollar

Canadian Housing Starts which were reported this morning showed signs of upside on growth in construction at 235.5K vs. previous starts of 192.5k. The loonie traded in a tight range overnight of 1.3453 and 1.3485, the range is within technical support of 1.3449 and resistance of 1.3490 yesterday’s North American range. The loonie weakness is seen coming from downside risk between US and Chinese trade talks unraveling, which would put a lid on global growth hurting commodity-rich countries. Later this week, and the most significant Canadian economic fundamental, to be reported on Friday are Canadian Employment Change. The Unemployment Rate expectations are for 1K and 5.8% respectively.

Key Movers

Despite Brexit continuing to be the primary filler of column inches within the UK, on the broader world, US/China trade talks remain the major global economic issue. Although the negotiations were dragging on it was hoped some breakthrough would be reached soon; however, Donald Trump's twitter offensive on Friday broke the calm and equity markets were sold off as a result. Asian markets took another leg lower overnight and one of the best barometers of global risk appetite, USD/JPY briefly slipped 110 overnight, although the big figure has been regained as North America has come online. It remains to be seen if another hike in tariffs will be implemented by Trump as threatened with markets hoping it was just sabre rattling to accelerate a conclusion to the impasse.

Further afield there have been some surprising monetary policy moves from Australia and New Zealand with unexpectedly hawkish and dovish moves seen throughout the week. Monday night saw the Reserve Bank of Australia bullishly hold rates when a cut was predicted, then last night the Reserve Bank of New Zealand shocked markets with a rate cut with both central banks now aligned at 1.5%.

Expected Ranges

USD/CAD: 1.3442 - 1.3488 ▼

CAD/EUR: 1.5059 - 1.5103 ▲

CAD/GBP: 1.7489 -1.7612 ▼

AUD/CAD: 0.9412 - 0.9456 ▼

EUR/USD: 1.1188 - 1.1212 ▲