Daily Currency Update

Get access to our expert daily market analyses and discover how your currency has been tracking with our exchange rate tools

The Loonie trades flat, helped by a plunge in oil production in Libya and expectations of a more dovish BoC.

CAD - Canadian Dollar

The Loonie starts this morning trading flat after rising Sunday night among its Group-of-10 peers following positive crude oil price action, which also helped the Norwegian Krone ( the FX market opens at 5 pm EST every Sunday.) The reason for the crude oil bounce was Libya's oil output falling to the lowest level since August 2011. On the economic release side, the Teranet - National Bank Home Price index came in at 0.2 and 1.9 month to month and year to year, respectively. It came in higher than the annual number of 1.4 percent last month. The USD/CAD is trading at 1.3065, which is 0.02 percent lower at this moment.

The Canadian dollar is expected to take a clear direction this Wednesday when inflation numbers and monetary policy are going to be released by the BoC. There is a good amount of economic information due this week in Canada as well. Economic performance in Canada is starting to show a few signs of weakness, but market participants are not pricing in any response from the BoC in the short-term. Even the pricing in the futures markets for March shows that a movement in the Canadian rate is improbable.

Key Movers

The FX market should be quiet, as it is Martin Luther King's day in the U.S. However, there are some headlines coming from Davos - Switzerland, given that the World Economic Forum Annual Meeting convenes there. So far, it is not decisively influencing the FX market, but it should have some implications over the next few days.

The EUR/USD pair falls towards the 1.1085 support level (the Greenback strengthens) after the International Monetary Fund predicted the world economy would strengthen in 2020 and that the downside risk is still prominent but less skewed. However, the IMF expects that it will be at a slightly slower pace than previously anticipated. They see 2020 trade growth accelerating to 2.9 percent from 1 percent, but they also see a cut in the global growth forecast to 3.4 percent versus the 3.6 percent in October.

Market participants have ramped up their expectations that the Bank of England will cut interest rates this month after data showed inflation fell to a more than three-year low in December. Market odds for a rate cut jumped to over 60 percent from a chance of 5 percent as recently as last week. Investors scrambled to reprice the likelihood of a rate cut following very dovish comments from policymakers and new signs of weakness in the UK economy. The GBP/USD and GBP/CAD pairs fall 0.12 and 0.14 percent at the time of this writing.

Expected Ranges

USD/CAD: 1.3050 - 1.3083 ▼

EUR/CAD: 1.4450 - 1.4495 ▼

GBP/CAD: 1.6919 - 1.6995 ▼

AUD/CAD: 0.8950 - 0.8980 ▼

NZD/CAD: 0.8602 - 0.8635 ▼