Daily Currency Update

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The Loonie falls along with crude oil and the risk off environment.

CAD - Canadian Dollar

The USD/CAD index is rising by 0.23 percent due to the risk-off environment, which means that equity futures in Canada, the U.S., and globally are falling. Later today, Fed chair Jerome Powell will attest to the U.S. economic outlook before the Joint Economic Committee. It is the first time he's ever appeared before that committee. This event might not bring much to the market participants. His assessment of the Fed's policy stance and the state of the economy probably won't change much since his Oct. 30th press conference. Still, market participants' expectations have probably changed, with the easing cycle seen as done and dusted in the near term.

Regarding crude oil, the IEA warned that oil demand might plateau around 2030 as cars become more fuel-efficient, and more EVs enter the market. Crude oil is the most important commodity for the Canadian economy. The IEA also referred to China's consumption growth, which will probably crumble later in that decade, topping out at 15.7 million barrels a day. U.S. production will reach about 21 million barrels a day in 2025 when its combined exports of crude and refined oil overtake Saudi Arabia's.

President Donald Trump renewed his assault on the Federal Reserve during his speech to the Economic Club of New York yesterday by saying that the U.S. was at a "competitive disadvantage" because the Fed had not followed the Eurozone into the land of negative rates. He also added that a, “significant phase one deal with China," remained "close" and "could happen soon," as Beijing was "dying to make a deal." He ended by saying that U.S. tariffs on Chinese goods would be "raised very substantially" if no truce was reached with officials in Beijing.

Key Movers

New Zealand unexpectedly held interest rates at 1 percent, in a move against expectations, and identified signs the domestic economy will stop slowing and that inflation will pick up. The NZD/USD and NZD/CAD pairs jumped over 1 percent, and, at this moment, both are trading at 0.6402 and 0.8485, representing a 1.3 and 1.12 percent increase, respectively. Does this surprising move show evidence of a global policy shift after the Fed signaled a pause in late October and after the RBA held the rate steady last week?

Expected Ranges

USD/CAD: 1.3236 - 1.3265 ▲

EUR/CAD: 1.4551 - 1.4602 ▲

GBP/CAD: 1.6944 - 1.7079 ▲

AUD/CAD: 0.9018 - 0.9081 ▼

NZD/CAD: 0.8458 - 0.8497 ▲