Daily Currency Update

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The Loonie weakens despite stronger crude oil price action

CAD - Canadian Dollar

The Loonie did not get helped by crude oil overall, despite it adding to to its modest gains on Friday as tensions in the Persian Gulf continue to elevate after Iran seized a British tanker. British Prime Minister Theresa May will lead an emergency Cobra committee meeting this morning to address the situation. The USD/CAD trades at 1.3103 at the time of this writing, representing an increase of 0.35 percent.

Canadian retailers reported an abrupt decline in sales as consumers cut back on purchases of groceries, alcohol, and clothing. The USD/CAD pair increased by the end of the last week to a high of 1.3110. According to Statistics Canada, retail sales declined for the first time in four months, edging down 0.1 percent to $51.5 billion in May. Excluding motor vehicle and gasoline station sales, retail sales decreased by 1.0 percent.

Technically speaking, the USD/CAD pair is testing resistance this morning at around the 1.3100 handle; however, if it is broken, it might test 1.3140. On the downside (stronger Loonie), it might test 1.3050 and then 1.3020 if positive Loonie catalysts are activated.

Key Movers

In the U.K., economic growth has stalled, and there is around a one-in-four chance that the economy is already in a technical recession. There is a very gloom outlook beyond October when the U.K. leaves the European Union. The possibility of a severe decline in the event of a chaotic no-deal about Brexit is strong.

It is an earning season in the U.S. from technology to retail, which seems to help the U.S. dollar marginally. The U.S. dollar index is increasing +0.11 percent at the time of this writing, and the global equity markets seem very quiet at this point, with the S&P futures gaining 0.2 percent, the 10-year Treasury yield at 2.04 percent, and gold remaining flat.

The EUR/USD pair trades flat at 1.1220 this morning with the global economy being a source of bad news for the monetary union. The slowdown in global commerce has severely hurt Germany, which is now expected to grow by a mere 0.5 percent in 2019, according to the European Commission. Last month, the ECB had cut its forecasts for euro-zone growth.

Expected Ranges

USD/CAD: 1.3050 - 1.3110 ▲

EUR/CAD: 1.4631 - 1.4735 ▲

GBP/CAD: 1.6292 - 1.6368 ▲

AUD/CAD: 0.9217 - 0.9252 ▲

NZD/CAD: 0.8836 - 0.8894 ▲