Daily Currency Update

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The Loonie rallies around 1.7 percent after falling almost 12 percent from the highest level this year.

CAD - Canadian Dollar

The USD/CAD is falling 1.7 percent (strong Loonie) after crude oil rallied. The global stock market seems to be forming a bottom, which does not mean that economic news will improve for the Canadian economy, and it might start to show very weak numbers following the global health crisis stemming from the COVID-17 virus.

Crude oil rallied as president Trump got involved into the price war between Saudi Arabia and Russia. At the same time Texas regulator proposed his state could coordinate output cuts with the producers.

A few minutes ago, Canadian January retail numbers came in at 0.4 percent versus the 0.3 percent expected month to month. However e-commerce sales were C$ 1.66 billion in January, up 9.8 percent from a year earlier. This represents 3.7 percent of total retail sales.

Key Movers

The Fed continues to improve U.S. dollar liquidity by providing U.S. dollar funding. At the same time, the Fed announced coordinated central bank line enhancements; these central banks have agreed to increase the frequency of 7-day maturity operations from weekly to daily. These daily operations will commence on Monday, March 23, 2020, and will continue at least through the end of April.

The coordinated central bank efforts between the Fed and 9 central banks, including the RBA ($60bn) and RBNZ ($30bn), is one factor for somewhat less volatile FX markets overall, and a modestly softer U.S. dollar. Other central banks included in the swap line facilities are Banco Central do Brasil, Danmarks Nationalbank, Bank of Korea, the Banco de Mexico, Norges Bank, Monetary Authority of Singapore, and Sveriges Riksbank.

This Covid-19 virus lockdown might mean a hard stop for the U.S. economy. Economic growth in the second quarter might bring a steep contraction in U.S. history, and probably surpass the worst period of the financial crisis in 2008.

Expected Ranges

USD/CAD: 1.4150 - 1.4348 ▼

EUR/CAD: 1.5157 - 1.5316 ▼

GBP/CAD: 1.6550 - 1.6999 ▲

AUD/CAD: 0.8245 - 0.8448 ▲

NZD/CAD: 0.8020 - 0.8294 ▼