Daily Currency Update

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The Loonie gets hammered following a negative mood in the capital markets and weak factory numbers.

CAD - Canadian Dollar

The Loonie slips to daily lows following weak factory data in Canada. At the same time, empire manufacturing in the United States printed at 12.9, higher than the previous print of 4.9 and a survey of 5.0, which is better than expected. As a consequence, the USD/CAD is touching new highs of 1.3277 and it is trading at 1.3274 at the time of this writing (weaker Loonie). There is no more critical data that will be released in Canada or the U.S. today; however, the Loonie is also being negatively impacted by the risk-off environment in the FX capital markets after the weakened global risk sentiment that followed Apple Inc. saying that its quarterly sales would miss forecasts due to the economic impact of the coronavirus.

Key Movers

The negative mood set the week off to a negative start when the Head of the International Monetary Fund, Kristalina Georgieva, said the lack of more significant improvements in the global economic system is hindering what’s already an “anemic” outlook for growth.

The Euro received negative news this morning after German ZEW data missed expectations, as the adverse effects of the coronavirus weigh on manufacturers outside of China. The ZEW survey expectations came in at 10.4 versus the 25.6 expected, diluting optimistic expectations of an improvement in the European economy. However, technically speaking, the EUR/USD pair is very close to a long-term support level at this moment, which is a “gap” formed back in April 2017. This price gap is formed between 1.0777 and 1.0818 and it represents a key support. At the same time, the EUR/GBP pair holds a technical support at around 0.8275.

Hogan repeated that the European Union would work within current mandates on a U.S. deal and added it would be “substance over speed” in talks with the U.S.. Regarding the relationship with the U.K., he said the E.U. is looking for a level playing field with the U.K.

The pound rises 0.3 percent following the release of U.K. job creation data in the fourth quarter, despite political turmoil over Brexit. According to the Office for National Statistics, the jobless rate came in at a four-decade low of 3.8 percent and the claimant count rate came in at 3.4 percent versus the 3.5 percent last month. The strength of the labour market suggests there might not be a rate cut by the Bank of England this year. The cable bounced to 1.3049, coming from an intraday low of 1.2971 earlier, as market participants added exposure to the Sterling. It accelerated its bounce after U.K. Chancellor Rishi Sunak said he is preparing to deliver the budget as planned on March 11th.

Expected Ranges

USD/CAD: 1.3250 - 1.3277 ▲

EUR/CAD: 1.4316 - 1.4350 ▼

GBP/CAD: 1.7254 - 1.7299 ▲

AUD/CAD: 0.8844 - 0.8880 ▼

NZD/CAD: 0.8469 - 0.8500 ▼