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The Loonie loses against the Euro despite an expected dovish position from the ECB

CAD - Canadian Dollar

It is tranquil out there for the Loonie with no new economic data. However, the EUR/CAD pair is flying higher after the ECB didn't change interest rates or its asset purchase program (see more details in the Key Drivers section below). Initial strong crude prices underpinned demand for the Loonie, however, at the time of this writing, the USD/CAD is rising 0.1 percent (weaker Loonie) following crude oil price action, which has erased some of its gains in the last few minutes. RBC said OPEC's best shot at draining the oil glut will probably take place this quarter as demand hits an annual peak and before a winter lull sets in. If producers fail to make a significant dent, their strategy to limit output may be considered a bust, as a lot of new supply is expected in 2020. Technically speaking, the USD/CAD continues to trade at a critical resistance level, 1.3150. The next resistance levels are 1.3190 and 1.3219. On the downside, 1.3098 and 1.3069 are two crucial support levels.

Key Movers

While the ECB and Mario Draghi didn't change interest rates or the asset purchase program, their initial statement suggested a potential rate cut in the pipeline and they are getting ready for more QE and deposit-rate tiering. The economic outlook in Europe is not getting better, and the ECB doesn't like what it sees when it comes to inflation. While one might argue that these circumstances could call for a policy easing today, the ECB gave the most reliable possible hint that a package of measures is coming down the pipe in September, including a rate cut with mitigating tiering measures and a renewal of the QE program. As a result, the EUR/USD pair has been trading close to its lows from the year; however, it has bounced strongly this morning, and the pair is trading at 1.1167, which is 0.25 percent higher at the time of this writing. The reason for this is likely because the Fed is making its announcement next week, which might have a very easy policy. While the ECB and Fed announcements this year have generally tended to be dovish, they have marked the bottom and top of the EUR/USD pair's trading range.

In Australia, Lowe said "It remains to be seen if future growth in demand will be sufficient to put pressure on the economy's supply capacity and lift inflation in a reasonable timeframe. It is certainly possible that this is the outcome. But if demand growth is not sufficient, the Board is prepared to provide additional support by easing monetary policy further. However, as I have discussed on other occasions, other arms of public policy could also play a role in this scenario." The AUD/USD pair is trading at 0.6955, representing a 0.32 percent fall, and the most important crosses with the Aussie dollar are trading weaker today as well. For instance, the EUR/AUD pair is rising 0.72 percent at the time of this writing.

Expected Ranges

USD/CAD: 1.3098 - 1.3144 ▼

EUR/CAD: 1.4622 - 1.4680 ▲

GBP/CAD: 1.6345 - 1.6446 ▼

AUD/CAD: 0.9090 - 0.9140 ▼

NZD/CAD: 0.8745 - 0.8793 ▼