Daily Currency Update

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The Loonie continues to be driven by optimism that the global economy has made it through the worst of Covid-19.

CAD - Canadian Dollar

The Loonie rose to the highest level in 12 weeks against the US dollar. Furthermore, it has been helped by crude oil, which has increased by 2 percent as producers favour a 1-month output cut extension. Increased risk appetite has pushed the Greenback lower since May 26th and it has moved commodity currencies higher. While aggressive Fed policy easing remains a weight on the Greenback, the USD's recent weakness seems to have been driven more by building confidence that the global economy has past the worst of Covid-19.

Technically speaking, the USD/CAD pair is down by over 0.5 percent and it is trading at 1.3490. There is a strong support level from February 28th at 1.3464. The Canadian economic data calendar included the April MLI leading indicator, which came in at -2.8 percent after falling only -1.7 percent the prior month. However, external and technical factors, not fundamentals, are driving trading of the Loonie at the moment. For now, some key technical levels in more extended time frames for the USD/CAD pair are resistance levels of 1.3833 and 1.3728 and support levels of 1.3464, 1.3439.

Key Movers

Last night, the Reserve Bank of Australia (RBA) rate decision was as expected, with rates held at the current level of 0.25 percent. The RBA noted that although the worst may be behind us, the real economic impact may not be felt for some time, with the unemployment rate expected to rise further, perhaps keeping the door open for rate cuts further down the road. The AUD/USD pair has been charging higher since the March 19th low and before the RBA release. It has gained about 15 percent since the March 19th low.

The Euro increases as higher Italian bond prices continue and while there is positive momentum ahead of Thursday's ECB meeting. The gains also came amid reports that Germany's Angela Merkel may provide a second stimulus package of as much as 100 billion Euros as part of the European Commission's plan to help the EU. The recovery package is substantial in its reach, particularly for the more vulnerable southern European member states. The EUR/USD pair has a critical resistance level at around 1.1239 from December 31st. It trades at 1.1188 at the time of this writing.

The GBP/USD pair has risen by 0.53 percent to 1.2558, buoyed by a report that the U.K. may be willing to compromise with the European Union in trade negotiations.

Expected Ranges

USD/CAD: 1.3464 - 1.3617 ▲

EUR/CAD: 1.5055 - 1.5133 ▲

GBP/CAD: 1.6845 - 1.7000 ▼

AUD/CAD: 0.9248 - 0.9300 ▼

NZD/CAD: 0.8563 - 0.8596 ▲