CAD - Canadian Dollar
G7 finance ministers and the central bank governor said that they are committed to using, "…all appropriate policy tools," to support economic growth; however, they did not provide specific measures to contain the economic damage from the coronavirus. Expectations of a coordinated policy response by developed economies along with other expectations that the same group is not ready to announce concrete policy steps have been confirmed, and North American equity, along with the Loonie, seem as though they will continue lower this morning after a strong "dead cat bounce" in yesterday's trading session. As a consequence, the Japanese Yen is increasing today by 0.49, 0.76, and 0.70 percent against the U.S. dollar, Loonie, and Euro, respectively. The Canadian dollar is among the laggards in the G-10 ahead of the OPEC meeting in Vienna this week.
The Canadian economic data calendar for today is empty; however, the BoC will announce its monetary policy decision tomorrow. According to Bloomberg, the interest rate probability shows a likely cut of 25 basis points tomorrow, an additional 25 basis points by June, and another 25 basis points by September this year. The implied rate is 0.86 percent by December (from 1.75 percent today), which is very different from a few days ago, when the coronavirus was not seen as a significant risk for the global economy. Of course, expectations can change again very quickly.
While bets on policy easing by the U.S. Fed remains at a 50 basis points rate cut in the March meeting, it is anticipated that the ECB will be cutting rates by 10 basis points in April. The British Pound continues to underperform major currencies, and the EUR/GBP pair rallied over 5 percent in 2 weeks, which, at these levels of an overbought Euro, does not mean it will continue going higher against the Pound. The news in the U.K. does not provide much confidence though, with the PM Johnson outlining the government action plan this morning. Furthermore, Boris Johnson has warned about a likely expansion of the coronavirus in the UK population. Still, he has urged the public to, "…go about business as usual." The number of people infected in the U.K. rose to 40.
1.3303 - 1.3403 ▲EUR/CAD:
1.4769 - 1.4925 ▲GBP/CAD:
1.6980 - 1.7132 ▲AUD/CAD:
0.8760 - 0.8834 ▲NZD/CAD:
0.8369 - 0.8439 ▲