Daily Currency Update

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The Loonie rises mildly along with crude oil and stock markets

CAD - Canadian Dollar

The Loonie continues to rise due to external factors, such as the increase of crude oil and North American equity over the last six days. However, on the release side, the trend in housing starts was 201,983 units in May 2019, compared to 205,717 units in April 2019. This trend measure is a six-month moving average of the monthly SAAR (seasonally adjusted annual rate ) of housing starts. According to the Canada Mortgage and Housing Corporation, the national trend in housing starts decreased in May as a result of the continuing decline in the trend for single starts as well as a decline in the trend of multi-unit starts that follows gains in this segment in urban areas in recent months. The positive news came from building permits, which came in at 14.7 percent versus the 0.9 percent expected. Canadian municipalities issued a record $9.3 billion worth of building permits in April. Economic data in Canada has been mixed, but a stronger than expected jobs report on Friday is contrasting with lower housing starts. For now, the Canadian dollar has an edge against the U.S. dollar as market participants are pricing in multiple rate cuts in the U.S. if the U.S. economy continues showing signs of weakening.

Technically speaking though, the USD/CAD fall (stronger Loonie) seems exhausted, and the danger of a correction in the Loonie was seen when the U.S. dollar index rebounded yesterday against other major currencies. The levels to watch in the USD/CAD for today are 1.3240 as a support and 1.3287 as a resistance. Any breakout from that range might follow with a trend continuation or a reversal.

Key Movers

President Trump threatened to raise tariffs on China again if President Xi Jinping doesn't meet with him. He said, "I think the differences can be worked out very easily. I would be surprised if he didn't go. I think he is going, I haven't heard that he's not." Mr. Trump said that levies on $300 billion of additional Chinese imports would be imposed immediately if Mr. Xi failed to show up, on top of a 25 percent tariff in place now on $ 250 billion of goods. He added, "We are expected to meet. If we do, that's fine, and if we don't, that's fine. Look, from our standpoint, the best deal we can have is 25 percent on $ 600 billion, OK?"

President Trump once again attacked and complained about the Fed policy and his chairman Mr. Powell. He said, "They made a big mistake. They raised interest rates far too fast... It's more than just Jay Powell. We have people on the Fed that weren't—you know, they're not my people." He added: "They did quantitative tightening, ... and they've now eased that, but it's still $25 billion a month, which is ridiculous. Now, China's doing just the opposite. They're pumping money in. So I'm winning, but I'm not winning on a level table."

Expected Ranges

USD/CAD: 1.3240 - 1.3288 ▼

EUR/CAD: 1.4986 - 1.5022 ▲

GBP/CAD: 1.6811 - 1.6909 ▲

AUD/CAD: 0.9201- 0.9243 ▼

NZD/CAD: 0.8691 - 0.8747 ▼