Steady economic progress for Canada proves itself
Tuesday 8 September, 2020
Daily Currency UpdateCAD - Canadian DollarWhile nearly all eyes have followed USDCAD and the Canadian dollars growing value over the last several months, the Loonie has made steady gains against the euro.On July 28, EURCAD broke through 1.58 on the heels of the European Union’s stimulus package. Nearly five weeks later, the EURCAD has declined almost 7 points, or over 4%.The Canadian economy has been recovering from the COVID-19 lockdowns steadily and its moving toward pre-covid levels. Today, StatCan released the August Labour Force Survey. Employment rose by 246,000 (+1.4%) in August, compared with 419,000 (+2.4%) in July. Combined with gains of 1.2 million in May and June, this brought employment to within 1.1 million (-5.7%) of its pre-COVID February level.The number of Canadians who were employed but worked less than half their usual hours for reasons likely related to COVID-19 fell by 259,000 (-14.6%) in August. Combined with declines in May, June and July, this left COVID-related absences from work at 713,000 (+88.3%) above February levels.Economic activity in the private sector expanded in August, according to the Ivey Purchasing Managers Index. The Ivey PMI beat expectations at 68.5 and any reading above 50 indicates industry expansion.
Key MoversFrance announced a 100-billion-euro economic stimulus to jump start Europe’s second largest economy. Its intended to restore the economy to pre-crisis levels by 2022 and will hand companies tax cuts and hiring subsidies.Sterling has continued to fall away throughout the week versus the dollar as some sense of calm is restored to the value of the world's reserve currency. After peaking close to 1.35 on Tuesday it is now trading under 1.33 as we get nearer to the next round of Brexit talks scheduled to start on Tuesday next week. Talks will run through to Friday. Markets will be hoping that some narrowing of the gap between the two sides can be forged to get a deal done by the end of the year. It seems implausible a deal will be agreed next week so this will likely run on a while longer. And with the end of year deadline drawing ever nearer its likely sterling will wobble on the back of negative headlines.The AUD had a rough session yesterday, falling from 0.7320 to 0.7265 on the day as global equities fell sharply. There was no obvious reason for the fall in equities however the moves spilled over into currency markets as commodity currencies like the Aussie and the Kiwi were hit hard while haven currencies such as the Japanese Yen and Swiss Franc outperformed.
- EUR/CAD: 1.547 - 1.557 ▲
- GBP/CAD: 1.730 - 1.744 ▲
- AUD/CAD: 0.949 - 0.955 ▲
- USD/CAD: 1.308 - 1.314 ▼