Daily Currency Update

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The Loonie weakens slowly despite of mixed retails sales data.

CAD - Canadian Dollar

According to Statistics Canada, retail sales numbers showed mixed data; retail sales came in at 0.9 percent to C$ 51.5B in November versus the 0.6 percent expected. However, core retail sales numbers (ex-auto) came in at 0.2 percent, lower than the expected 0.5 percent. In general, sales rose in Canada’s three largest cities and e-commerce sales reached a record as a percent of total retail sales. Sales increased in 6 of 11 subsectors, representing 70 percent of total retail trade.

Key Movers

The EUR got slammed after ECB Governing Council Member Olli Rehn said that the Euro area inflation expectations are stranded at a depressed level. However, IHS Markit’s composite Purchasing Managers’ Index for Germany rose to a five-month high of 51.1 in January, beating forecasts for a 50.5 reading. Furthermore, very early today in Europe, the composite PMI in the Eurozone was unchanged, coming in at 50.9 in January, which was the same as in December but below the estimate of 51.2.

According to Bloomberg Economics, this is consistent with the expansion staying broadly stable in the first month of 2020. Bloomberg Economics expects sentiment and activity to start improving more decisively into 2020.

What happened with the Pound was even more astonishing. Although the robust PMI numbers confirmed positive data for the U.K economy, the Sterling tumbled, inducing market participants to sell the Pound likely to avoid the risk of a rate cut next week, which for now is staying at 0.75 percent. The Sterling had been rising over the previous few days, but it fell after Friday’s U.K. Purchasing Managers’ Index data rose to the highest level since 2018 in January. Most market participants are wondering if this is just a profit-taking price action or if there is something else that the market is pricing.

Expected Ranges

USD/CAD: 1.3121 - 1.3172 ▲

EUR/CAD: 1.4460 -1.4517 ▼

GBP/CAD: 1.7159 - 1.7307 ▲

AUD/CAD: 0.8960 - 0.8994 ▼

NZD/CAD: 0.8651 - 0.8700 ▼