Daily Currency Update

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The Loonie trades flat as we await news from the Fed in the U.S.

CAD - Canadian Dollar

The U.S.-Mexico-Canada trade deal gained backing from House Democrats, so it will be put to the vote next week after House Democrats secure critical revisions on the environment, pharmaceuticals, labor, and overall enforcement. In Mexico City, the revised USMCA was signed by representatives from the three countries.

On the economic release side, the capacity utilization rate was released; it came in at 81.7 percent, while the expected number was 82. The USD/CAD pair fell five pips towards 1.3228, but the most important catalyst for the Loonie today will take place at 2:00 pm EST when the Fed will likely keep its benchmark interest rates at the 1.75 percent level after its two-day meeting. The Fed is also expected to keep a wait-and-see posture on more rate reductions, but market participants will eagerly be waiting to hear about the FOMC updating its rate forecast through 2022. As usual, Chairman Jerome Powell will give a press conference at 2:30 pm EST.

Key Movers

The consumer price index in the U.S. rose 0.3 percent in November on a seasonally adjusted basis, after rising 0.4 percent in October. This is 0.2 percent higher than expected. Increases in the shelter and energy indexes were significant factors in the seasonally adjusted monthly increase of the all items index. According to the Bureau of Labor Statistics, increases in the indexes for medical care, recreation, and food also contributed to the overall increase.

An essential poll released yesterday showed that Prime Minister Boris Johnson remains on track for an overall majority; however, his lead is declining. The YouGov MRP poll showed a narrowing of an anticipated win for conservatives from the first prediction two weeks ago. The GBP/USD and GBP/CAD are rising 0.12 and 0.13 percent towards 1.3171 and 1.7428, respectively, at the time of this writing. According to Bloomberg, anti-Brexit campaigners are putting their efforts into a tactical vote campaign in the hopes of stopping Johnson’s Conservative Party from gaining a majority.

White House economic adviser Larry Kudlow pushed back on the news that China is expecting the U.S. to delay a threatened tariff increase set for Sunday. Kudlow said that no decision had been reached yet. It seems like China, and the U.S. are de-escalating tensions by cutting import taxes currently in place.

There is a lot of uncertainty surrounding the European Central Bank, more specifically related to its new President Christine Lagarde, who will lead her first policy decision tomorrow, which is the same day as the U.K elections. Uncertainty remains over Lagarde’s first meeting, as there is no clear expectations about the future direction of rates.

Expected Ranges

USD/CAD: 1.3191 - 1.3265 ▼

EUR/CAD: 1.4603 - 1.4744 ▼

GBP/CAD: 1.7370 - 1.7517 ▲

AUD/CAD: 0.9025 - 0.9077 ▲

NZD/CAD: 0.8637 - 0.8723 ▲