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The Bank of Canada held its key rate at 1.75 as expected

CAD - Canadian Dollar

The Greenback falls 0.19 percent against the Loonie this morning after the BoC held its rate at 1.75 percent, which was in line with market participant expectations. The BoC had an upbeat view of the Canadian economy, but it still had concerns about global trade issues.

The BoC will remain data dependent and commented that there is evidence of a temporary slowdown in early 2019 that will be followed by a pick up starting in the second quarter. It pointed to a more stable housing market at a national level, continued strong job growth, the beginning of an oil sector recovery, and a pick up in both consumer spending and exports in the second quarter. It also mentioned that the removal of steel and aluminum tariffs and increasing prospects for the ratification of CUSMA would have positive implications for Canadian exports and investment. However, the BoC pointed out that trade restrictions introduced by China are having direct effects on Canadian exports.

Despite that the BoC repeated that the accommodative policy interest rate continues to be warranted, the USD/CAD pair increased to 1.3645 right after the release, with the main driver being yesterday's risk-off session when the global equity markets had a strong sell-off.

Technically speaking, as long as the USD/CAD pair trades below 1.3521, the USD/CAD might test supports at 1.3481 and 1.3469 without losing sight that the USD/CAD pair is still in a long-term uptrend.

Key Movers

The Euro is weakening this morning. The EUR/USD and EUR/CAD pairs are falling 0.1 and 0.3 percent respectively. After ten months, President Trump and European Commission President Jean-Claude Juncker have yet to reach an agreement. It seems like the agreement of a tariff truce has had very little progress. Cecilia Malmstrom, the EU's trade commissioner, told reporters in Paris after meeting with US Trade Representative Robert Lighthizer, “I don't think the US is ready to start on the tariff negotiations." Furthermore, the growing polarization in Europe is evident in the recent elections that saw a fragmentation of the mainstream center-right and center-left parties that some in Washington see as a sign of the more significant structural obstacles to a deal.

In China, Ministry of Commerce spokesman Gao Feng said he hopes the US will fix its inappropriate practices and added that any progress in the trade talks depend on America's attitude. He also reiterated that China couldn't accept its rare earth products being used against itself, although it is willing to meet other countries' demand. The USD/CNH falls 0.08 percent this morning (stronger Yuan).

Expected Ranges

USD/CAD: 1.3469 - 1.3521 ▼

EUR/CAD: 1.4961 - 1.5040 ▼

GBP/CAD: 1.6935 - 1.7017 ▼

AUD/CAD: 0.9312 - 0.9340 ▼

NZD/CAD: 0.8744 - 0.8777 ▼